Justin B. McClelland

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

A week has passed and I’ll review my one-week goals due today:

Tasks:
1. Make at least 10 offers on properties listed on MLS – FAIL
2. Brush up on REO literature so I can start making REO offers too – PASS
3. Distribute my new door hangers with brochures to select Urbana neighborhoods – FAIL
4. Find more cash-buyers (section 8 landlords, find past cash buyers in MLS, members of Central Illinois Apartment Association) – PASS
5. Put something together for a CraigsList nationwide cash-buyer campaign – FAIL

At first I thought this was a short list, but there are plenty of details that go into each task.  As far as the goals that I passed, I’ve been reviewing my REO Rockstar DVD’s every night.  That takes the place of any recreational TV watching (not like I did that anyway).  I’ve got a list of Section-8 landlords, landlord members of the Central Illinois Apartment Association, and still need to get some MLS cash buyers.  But I’ve got over 150 contacts so far that I may be able to add to my cash-buyer list.  I’ve got some emails, some mailing addresses.  I’m going to be professional with this task and send out a formal letter via USPS mail.  The text of the letter is as follows:

Dear LandlordName,

My name is Justin McClelland and I’m a fellow real estate investor here in Champaign County Illinois, and I’m the owner of Schwaps.  I’m writing in effort to introduce myself as I’d be honored to make your acquaintance.

I wholesale single-family residential properties, primarily located in the cities of Champaign and Urbana, to cash buyers for 65-75% of Before-Repair-Value.  Granted that you are a landlord here in town, I presume that you’d like to be made aware of such deals when they come about.

If you are interested in being notified of these deals please contact me via any of the following methods:

217-555-5555 – Office
217-555-5555 – Mobile
217-555-5555 – Fax

You may also travel to the Schwaps company website and submit your property buying specifications online.  You may go directly to the page:

www.schwaps.com/LandlordNameGoesHere

I have enclosed a couple of business cards that you may keep on file and pass along to your associates.  Thanks you for your time, and I look forward to working with you.
Sincerely,

Justin McClelland
Owner

If I may say so myself (which I may), I think this letter is pretty good.  And the call-to-action with the various contact methods is ideal, in my opinion.  If they just want to call, they can.  But if their intrigued by the URL with their name in it, they’ll be taken to the 404 page for the Schwaps company website, which is actually a wholesale buyer sign-up page. Pretty slick right? I mean, if you received a letter that had a website link with your name in it, you’d check it out, I’m sure….I know I would.  Shout out to fellow BiggerPockets blogger Ben Roberts for that ingenious idea!

As far as the tasks that I failed to complete, I’ll just keep those as tasks to have done by next Monday.  Only 3 tasks, but they should keep me busy when combined with the other tasks I have to complete.  I have 20 new leads to follow up on that I received over the weekend.  One of which is SMOKING hot, more details on that in the future.  And I have about 5 older leads that I need to follow up on.  In short, I have ALOT to do.  So in closing, I’ll summarize my tasks scheduled for completion by next Monday.

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

- Peace Out

Real Estate Cash Buyer, MLS, Monday, REO

In this series of videos, I give a brief overview of how Screen Scraping (data collection) with software such as Mozenda can greatly benefit Real Estate Investors. I’m excited about this software. I’m glad I found it as I’ve used others that aren’t even half as good. Watch the entire combined 17 minutes (part 1 and part 2) and I guarantee it won’t be a waste of time.

- Justin

Entrepreneurship, Real Estate 61820, 61821, Champaign, ChampaignHome, ChampaignHomes, Database, Entrepreneurship, IL, Illinois, Investing, Investor, Justin Bernard McClelland, justinmcclelland, Melissa Data, Mozinda, Real Estate, REO, Screen Scrape, Screen-Scraping, Urbana, Wholesale, Wholesaler, Wholesaling

I visited the rehab house that I wrote about on Friday and checked out the interior. This house was completely gutted with no electrical/plumbing. I only checked out the inside due to the suggestions of other investors, but I had no-idea what to look for. I took some video on my flip mino, so when I get a chance I’ll post it here. The seller is extremely motivated, so I think I’ll counter his $5K counter at $3K, then see if I can find a rehabber to take it for $10K. Maybe I shouldn’t talk numbers on this blog because more people read this than I know of. Oh well. A $7K come-up would be fantastic, but I could settle for $5K.

I hit the jackpot in regards to adding to my buyers’ list. I figure that the all of Section 8 property owners are investors themselves, so I called up the Section 8 office, posed as a student, and asked for the property addresses for all of the Section 8 properties around town for demographic research (I was going to reverse-lookup and find the owner info by address). They shot me down and said the information is sensitive and they just don’t hand it out. So about two weeks later, I called as an interested property owner that wanted to offer his properties for Section 8. I asked for an application, handbook, and other Section 8 property owner info. Jackpot! As I type, I’m looking at this packet of information containing the property address, contact person, and telephone number! Pure Gold! I bet I could go down the list and cold-call (rather hire a VA to do it) each Section 8 property owner to see if they have interest in the rehab house. If they don’t, still add to the buyers’ list. If they do, I may have my $7K in hand soon.

In about two hours, I meet-up with a local wholesaler who is newer than me. We’re going to talk about strategies here in town, future joint ventures, etc. I’m a little upset because I forgot about this appointment until just now and really was set on going for a long-run outside. Looks like I’m stuck indoors at the gym tonight. Still gotta get it in. I ate a bunch of garbage last weekend, I need to get back on point.

Tomorrow morning, I meet with Shane at a property in St. Joseph. I plan to do the same with that property that I did with the property on Duncan Avenue (floor plan, video, pics, website) and perhaps make a flat-fee for marketing. However, this time I have blank white corrugated plastic bandit signs on the way (100 quantity). With stakes, they cost me $178 at SignWarehouse.com. I’m going to blast all of Champaign County this Friday night with these signs. My phone will be on fire! I can’t wait. This reminds me, I need to get PATlive service situated before this Friday, so they can field my calls instead of having them go to a voicemail box.

- Justin

Real Estate Entrepreneurship, Investing, Real Estate, REO

Old Goals from the week of June 29th:

1. Contact Title companies in town for information on the real estate transactions in town involving deeds without mortgages. I’ll find my cash-buyers this way. (Done. Although none have returned my emails, perhaps I’ll call)

2. Acquire a pre-foreclosure list from either the County Recorder or SalesTeamLive (Failed.)

3. Have my local VA create my handwritten envelopes to those in pre-foreclosure; send mailings to these people. (Failed. Dependency on Goal #2)

4. Find a programmer to optimize both of my WordPress blogs; schwaps.com/blog and justinmcclelland.com. I cannot figure out why they move so slow. Actually, I’ll try updating to WP2.8 and if that doesn’t make a difference then, I’ll try a programmer. (Done. Updating to WP2.8 made little difference, I’m in touch with programmers now)

5. Order the 100 bandit signs and stakes. I’m not making signs again myself unless I absolutely have to, huge time drain. (Done. SignWarehouse.com is a great place for signs and very cheap)

6. Create a list of local investors in Champaign-County, call other bandit signs, paper ads, etc. (Done.)

7. Order some flyers that look like real $100 bills. I’ve heard that these are extremely effective, I will give these a try. (Failed. Just plain slacked on not placing this order.)

New Goals for the week of July 6th:

1. Ramp up the remaining aspects of the advertising plan; flyers, post cards, business cards, news ads, etc.

2. Acquire a pre-foreclosure list from either the County Recorder or SalesTeamLive.

3. Follow-up with local Title Companies

4. Find additional Realtors to work with. I’m only working with two at the moment. I think one of them has been avoiding me since our first meeting, after she found out I was new to investing. The other seems to be out of town often. I need to not limit myself here.

5. Contact and perhaps arrange appointments to meet all of the other local investors. There is a good possibility that business can be done between us all.

6. Find out how I can legally build a birddog army. But not only birddogs who find property, but more-so birddogs who can help find property buyers. Find new lawyer to speak this over with.

7. Purchase some additional stationary for the Ad campaign and a reflective vest for safety when putting out bandit signs at 3AM (this also will give a greater appearance of legitimacy, then maybe the cops won’t stop me again). Make these purchases through my Net30 vendors, so that I can continue to build business credit.

- Justin

Real Estate Entrepreneurship, Investing, Real Estate, REO

The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Per:

http://www.federalhousingtaxcredit.com/2009/faq.php#1

I’ll have to go back to the drawing board as far as marketing and my exit strategy. Maybe I can still make that deal work.

- Justin

Real Estate Entrepreneurship, Investing, Real Estate, REO

I have a deal that’s in negotiations at this time (at least I hope you all consider it a deal, this would make my very first).

I ran across a 3/1 900 sq. ft. rehab that’s located in a less-desirable area of Champaign. The seller originally was asking $8K and estimated that the property needed $15K of rehab (new drywall and plumbing work). The ARV of this property is around $40K.

I made a lowball offer of $2,500 yesterday. The seller called me today and verbally countered at $5K. I’m thinking of countering at $3,500 with 60 days allowed for closing.

Here is my wholesale exit strategy. I think I could flip this very quickly to a first time homebuyer who would use the $8K tax credit and the HUD 203K rehab loan to perform the necessary rehab plus additional improvements that they desire.

I would like to wholesale the property at $8K and make a quick $4,500. By offering the property at $8K, the house could be marketed as a “Free House” due to the fact that the $8K credit may now be used by buyers towards the down-payment.

I just ended a phone call with Shane as I type this and he strongly suggests that I atleast take a look at the inside of the property, regardless of the lowball bid, he says if it’s bulldoze worthy then it’s not even worth the time. He also, suggests that I flip the property to another investor and not a retail buyer due to the greater ease of transaction. Per his suggestion, I just scheduled to view the interior early next week. The seller seemed a little annoyed. But oh well, I’m not the one in the bind and needing to sell badly. We shall see how this turns out. $4,500 would sure look good in the marketing budget right about now…

- Justin

Real Estate Entrepreneurship, Investing, Real Estate, REO

Since Sunday morning my phone has been ringing non-stop with buyers interested in the property I was marketing. I didn’t have an equitable interest in the property (1104 S. Duncan), however I was assisting the owner with the marketing free of charge, which kept me legal. Not charging anything up-front actually helped in the long-run because; I was able to use an actual property to draw buyer leads with and help a fellow investor out at the same time. The house actually was put under-contract, not by any of my doing, the day after I posted the signs. However the buyers still kept calling. Once I found the house was under-contract I changed my voicemail message and let callers know that the property was sold. The message also directed them to a squeeze page (champaigndeals.com) which took their information so that they could be notified of future deals. I used a Skype phone number for my signs (I’ll never stray away from Vonage again, Skype is garbage) and I was able to keep record of each number that called in. So yesterday evening I set-up a automated call blast (using callfire.com) to call of the callers letting them know that the house was sold and informing them of the champaigndeals.com website. I now have about 30 more buyers on my buyers’ list than I started with.

Overall, despite the tedious manual labor involved in creating the signs, I’m very satisfied with the results. For next time; I’m going to ditch Skype and purchase Vonage numbers, I’m going to order premade signs with metal stakes, and I’m put more signs out and spread out to other parts of Champaign County, perhaps I’ll put out 200 signs next time instead of 38.

- Justin

Real Estate Entrepreneurship, Investing, Real Estate, REO

I’ve been doing a lot better in regards to accomplishing my weekly goals. I’ll provide a summary of last weeks’ goals:

1. Begin the SEO of my sites (done)

I’ve begun the keyword research of additional domains that I’ll buy for the http://www.schwaps.com website. After a lot of research on SEO, I know that having a domain name with your desired keywords in it helps SEO. Also, having your keywords in your Title HTML tag.

2. Start advertising all over the web to add to my buyers’ list (done)

I started using Postlets.com which updates CraigsList, Backpages, and a slew of other sites. Thus far, it seems like I get more spam than anything else from these postings. But for free, I’ll take the extra exposure.

3. Gather the information from the county regarding property buyers who used cash (done)

I did go the the County Recorder’s office and use the public terminals, however I found that I cannot search specifically for a property deed sans mortgage, which is how I believe I need to search to find cash buyers.

4. Get signed-up with PATlive answering service (failed)

I may hold off on this for just a few more weeks, as I don’t have an immediate need for my call center staff just yet. I may schedule this to go live about 2 days after my first round of mailings.

5. Select a group of freelancers to post Champaign, specific real-estate articles to the Schwaps.com blog (done)

I found a guy using Guru.com who is able to do this for $2/100 words! He sent me a sample article that was on point too. His competition wanted $50 per article. I’m glad I stumbled upon him.

6. Select an off-shore virtual assistant to perform some of the clerical duties I don’t have time for (done)

I have a VA from India on stand-by.

7. Order about 100 bandit signs for placement around Champaign-Urbana (failed)

I didn’t order the 100 bandit signs, however I did make 40 signs on my own and placed them around town. My phone has been blowing up for the past two days! Can’t knock the bandit signs at all.

8. Hire a freelance graphic designer to create some handbill and full-page flyers (done)

Although I didn’t hire one. I found a company with a fantastic portfolio and for a 3 designs they quoted me at $1K! That’s not bad, but it’s a hell of a lot more than I was planning for. I’ll go with them when I have more marketing capital, until then I’ll do the designs myself unfortunately.

Goals for the week of June 29th:

1. Contact Title companies in town for information on the real estate transactions in town involving deeds without mortgages. I’ll find my cash-buyers this way.

2. Acquire a pre-foreclosure list from either the County Recorder or SalesTeamLive

3. Have my local VA create my handwritten envelopes to those in pre-foreclosure; send mailings to these people.

4. Find a programmer to optimize both of my Wordpress blogs; schwaps.com/blog and justinmcclelland.com. I cannot figure out why they move so slow. Actually, I’ll try updating to WP2.8 and if that doesn’t make a difference then, I’ll try a programmer.

5. Order the 100 bandit signs and stakes. I’m not making signs again myself unless I absolutely have to, huge time drain.

6. Create a list of local investors in Champaign-County, call other bandit signs, paper ads, etc.

7. Order some flyers that look like real $100 bills. I’ve heard that these are extremely effective, I will give these a try.

This list isn’t long enough, but that’s all I can think of for now. I’ll add to it later. I also have some information to post regarding how I set-up my bandit sign phone system/website. If I have time, I’ll add this later tonight.

- Justin

Real Estate Entrepreneurship, Investing, Real Estate, REO