Justin B. McClelland

So I will maxin and relaxin yesterday and cooking up some heart-attack food (fried chicken and french fries) before the super-bowl and I get a call from the owners of the “wholesale deal from hell” (that’s its’ new name).  I said I wasn’t going to blog about it anymore but…..I lied.  The sellers called to arrange a meeting so that perhaps something could be worked out.  Just as a refresher, this deal is the one where I negotiated a short-sale as their 10K property was upside-down by 60K dollars.  After the short-sale was negotiated, the liens were reduced to the sum of 9K, which took all of the sellers’ proceeds.  I spoke with other local investors about this and one resolution is to write-up a bill-of-sale for the personal property inside the of the house in the amount of what’s negotiated between the seller and buyer.  So for instance, a bill of sale could be written for 9K for the personal property in the house, as that was the original agreed sale price of the house.

Apparently, this is a common practice in this unique situation.  However, it sounds fraudulent as hell to me.  I mean, if not, then why wouldn’t ALL short-sale investors do this to compensate pre-foreclosure sellers.  Maybe they do…do they?  My buyer that the contract was assigned to is willing to shell-out another 7K, if I shell-out 2K.  It’s not a problem for me, but I’m going to run this by my lawyer first.

Welp, off to the 9-5

Real Estate, Wholesale hell, Lien, Short Sale, Wholesale

It’s been a while since my last post and a lot has gone down.  I’m going to change my Accountability Mondays to Accountability Tuesdays.  Mondays are just way too busy for me.

So to address the “40 offer/week” goal that I’ve had for the past 4 weeks.  I still haven’t reached it.  HOWEVER, next week it should be reached.  This is quite a lofty goal that is definitely obtainable, but not easily however.  I’ve almost perfected the process that I have in place to efficiently make these offers.  I definitely could’ve made the 40 offers in a manual fashion, but that’s just not my style.  I HATE to work HARD and NOT SMART.  That’s just plain dumb!  I’m sure you’ve heard the Abe Lincoln quote:

Give me six hours to chop down a tree and I will spend the first four sharpening the axe.

I couldn’t agree more.  Spend the first four hours sharpening the axe and you could probably chop down 3 additional trees with the last two hours that you have to work.

I spoke once before about the system I’m creating for my offers to expired MLS listings.  I got hung-up for about a total of 8 hours on an Excel spreadsheet that would recognize my VLOOKUP function (if you’re an Excel pro, get at me, I’ll pay you).  I think there’s a bug in Excel that’s preventing me from doing what I want, so I’m transitioning towards the use of a SQL database.  I’ll then be able to write some queries that will spit out my data to a spreadsheet and then, I’ll get my mail-merge on.  *The geeks that are reading this, know what I’m talking about.*  If you don’t know, I suggest finding someone who does so you can work smart too.  So anyway, I say all of that to say, “I haven’t reached my 40 offer goal yet, keeping the same goal for next Tuesday”. Broken record I know.  But if you’re meeting ALL of your goals everytime, their not set HIGH enough.  There, I just made myself feel better.

Onward an upward. So on a positive note, I’ve progressed quite a bit in other facets of my business.  I’ve acquired an additional Realtor to include in my inner-circle.  This is actually a big-deal, because she is a Realtor that has numerous ties to investors in California.  I mentioned a while ago, my efforts to obtain cash-buyers that invested in a new condo construction near the U of I campus.  Well, this Realtor actually sold about half of the units in the complex and still corresponds with many of the out of state investors she sold to.  Her and her brokerage has a working relationship with the Marshall Reddick Real Estate Network in California.  We met on Saturday and discussed ways that we can work together in the future.  Basically, if she can bring me a cash buyer from her network, we’ll split deals down the center.  This is good.

Also, I met with one of the sellers from the everlasting wholesale deal #1.  I could tell that he was beginning to avoid my phone calls, so I got him to agree to a meeting with me.  Preparing for this meeting took an entire Saturday morning and the meeting went down Monday evening.  It turns out, he was just severely confused about the entire situation.  Confusion leads to frustration and  speculation.  Not good.  I explained all of the details with his liens and all of the options that he (doesn’t) have with this property.  I inundated him with information and had an answer to each of his rebuttals.  Following the meeting, I could see the defeat in his face.  He now really realizes he’s not going to see any money from this deal because it’s essentially a short-sale.  I meet with his Sister Wednesday night.  Once I explain everything to her, I should be able to speed this thang up and avoid any possibilities of legal action (specific performance suits, i.e. more time sans check).  By the way, I feel like a Realtor with all of this hand-holding.  It SUCKS to be one of them! I’m not holding your hand, I don’t know you like that!  In the future, I’m going to avoid these types of small, complex deals like people with halitosis (you thought I was going to say the plague, right).

And lastly, I met with the distressed landlord who wants to short-sale his rental.  I picked up 90% of the paperwork today and will return on Thursday to get the rest.  This guy is the epitome of a distressed seller.  And since he is an investor, I barely had to explain anything to him.  He pretty much knows how it works and is educated about what a foreclosure can do to his FICO.  His main motivation is to preserve his credit.  I wish all sellers could be like this.  Hopefully, I can get many more short-sales in the pipeline.  This is the second short-sale lead that I “stumbled upon”.  I can’t wait to start marketing to pre-foreclosures with a REAL effort.

And lastly (for real this time), I had my second meeting with a future business partner for a Tax Lien investing company.  I’ll reiterate that the Tax Lien/Tax Deed investing game is supremely slept-on.  Most investors who invest in these most likely don’t tell anyone and keep it a secret.  But, I don’t care, I’m going to start sharing it all.  After watching a fellow Champaign investor write a check for $560,000 at last years lien sale, I know this is something worth exploiting.  Me and my biz partner are going to create money out of air.  The plan is to borrow money and invest the borrowed money into Tax Liens.  We’ll profit the spread between the cost of the money borrowed and the net proceeds from the lien penalties whether redeemed or foreclosed.  Simple as that!

- Peace Out

Liens, Real Estate, Short Sale cali, excel, Short Sale, Tax lien

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

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

I indeed decided to place an advertisement in the 2009/2010 Yellow Pages.  Although I believe print advertising is a dying medium, I’m following my gut on this one.  Deep-down, I really believe that the homeowner who is at risk of being foreclosed on may turn to the Yellow Pages to find who to call.  This would be especially true, if that homeowner is older and is more used to using a print directory vs. the internet.  The older homeowner will most likely have more equity in their house; see how this makes sense in my head?  You should.  And the main incentive is that my ad will be the only one in the Real Estate section about foreclosure prevention…boo-yhaw!

And I just thought about this, but it’s too late now.  I should’ve used an exclusive phone number and had it forwarded to my main phone number, just for advertisement tracking purposes.  It’s too late now, so I’ll just have to ask every caller how they heard about me. The 2″ Yellow Page ad cost me $60 monthly, so $720 for the year.  You should see a blog from me within the next year about how a Yellow Page lead generated “X” ROI.  Everyone told me not to place an ad in the Yellow Pages, all I heard were naysayers.  But when folks turn right, I go left.  You’ll see how this turns out…oh yeah…you’ll see…

- Justin

Real Estate Advertising, Champaign, ChampaignHomes, Entrepreneurship, Foreclosure, Investing, Marketing, Print Directory, Real Estate, Schwaps, Short Sale, Urbana, Wholesaling, Yellow Pages