You SURE that house is empty??

So there I was yesterday, driving along after an appointment and I see this run-down house on a corner lot; long grass, dead lawn mower, weeds in the driveway, blinds down in the windows, peeling paint, no sign of a vehicle and certainly no sign of life. I spoke to the neighbor across the street, who said she hadn’t seen anyone there for months, so I walked over to our subject property to see if the electric meter had a cutoff tag on it. On the way over, I could see in the sand at the end of the driveway that there were no tire marks, so surely this place was abandoned?

When I got to the house, the electric meter was still spinning and I heard the phone ring inside….What? Somebody actually lives here? Sure enough, when I knocked on the door, a lady appeared and after introductions she confirmed that she wasn’t open to the possibility of selling her house, but would call me if things changed. Just goes to show, it may LOOK abandoned for months, but you never know! I’ll keep her number in my back-burner file and check back with her from time to time, in case her situation changes.

Those of you who’ve been investing for a while will agree it’s a numbers game and the frequent dead ends will eventually lead to a good deal.

Onward,

Richard

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Back In The Saddle!

Finally after several months of craziness and being in a sort of spidery limbo land with our business, my co-founder and Chief Arachnid,  Kevin Skarritt has taken an offer he couldn’t refuse and moved on to pastures new in Michigan, where he’s heading up a new department, handling the social media development for a local company. Good luck to Kevin; I hope we can fill your shoes back here at Black Widow Network and so begins the task of picking up where we left off from!

We have a new server and are currently making sure all the existing elements of the site are functional, then we can continue with all the Phase II stuff we had planned from the get-go. We’re excited to be moving forward again and will be offering some neat products and services for the real estate investment community, along with our usual edgy and enthusiastic outlook on this industry.

These are significant times in real estate investing and there’s a whole lotta opportunity headed our way, so here’s to grabbin’ that wave and doin’ some surfing!

Warm regards,

Richard

Leap….. and the net will appear.

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Made Any New Contacts Lately?

Seeing as we’re a social network I figured I’d give you guys a quick reminder to take a gander at profiles of other investors in your area. Our investor search facility is easy to use and you’ll be surprised to see the calibre of some of the investors who’ve signed up with Black Widow Network.

Real estate is not an easy business and having access to other like-minded individuals will be of great benefit to you going forward, whether you’re just starting out or taking an existing business to the next level. Every time I speak to another investor, I come away with a renewed sense of purpose and usually a couple of things to keep in mind as I try to navigate what can often be some pretty trecherous waters.  Remember to offer the other person something in return for their time, whether it’s the number of one of your attorneys, a source of private funding or some marketing strategy that’s been particularly fruitful for you. Networking is a two-way street and by reaching out you’ll find good things coming back to you, but please be sure to approach this activity with a “What can I do for you?” type of attitude…..by not expecting anything in return, you’ll get treated with respect and people will appreciate your genuine interest in their well-being; a sound basis for expanding your network!

What else does a good networker do? Leave your comments below…..

Regards,

Richard

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When Is A Hard Money Lender NOT A Hard Money Lender?

When they’re a private lender! What’s the difference, you ask? Well, we’ve mainly used Hard Money Lenders to fund our deals and the scenario usually goes like this: Three points up front (or five points if you roll them into the loan), 14% interest payable monthly, with a six-month term that can possibly be extended to twelve months. Not that bad and perfectly okay as long as you factor these costs into your figures.

So what about the Private Lender? These are typically folks who aren’t necessarily in the business of lending money, but are looking for a return on their investment and are willing to do so in a real estate environment. The nice thing is that their terms can be more palatable. Take the deal we’re closing on today: Single family house we plan to fix and flip…..

Points: None whatsoever

Interest: 13%

Term: Twelve months

Payment: None - interest is due when we cash out our lender as we sell the house; we pay the interest due for the period of time we’ve borrowed the money.

Obviously this is a better situation than the Hard Money version and our lender is quite happy with these terms, PLUS we’re borrowing enough money to make our acquisition, do the rehab, cover closing costs and holding costs for six months. We’re buying right because the total amount borrowed is not over 60% of what the property will eventually sell for.

Our goal is to find more sources of funds like this and see if we can get the rate down to 10%. The no payments thing is great because we’re not stressing about having to make a payment and our lender doesn’t have to bother doing monthly statements etc (but he does have to be comfortable getting his interest on the back end).

The reason I brought this up is just as a reminder to you, to make a point of devoting some time to seeking out Private Lenders, especially those with bigger pockets with whom you can do multiple deals. Funding is the gas that fuels our real estate engine and once you have an endless supply, you can jump on opportunities as they present themselves…. AS LONG AS you’ve bought at the right price and done your numbers correctly!  Sorry, I had to throw that on the end!

Now go get ‘em!

Richard

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Anyone For Rehabbing?

As I’m writing this post, my rehab partners and I are just beyond the mid-point in a single family house project. The majority of the carpentry is done, exterior paint and vinyl siding are done and the interior painting is well underway, with primer going on the walls, ceilings and trim as we speak.  We’ve had to do a primer coat because the surfaces were so dirty and discolored from years of smoke, lack of cleaning and an incredible amount of drawing on the walls with pens and crayons - my Mom would have murdered we for writing anything on the walls!

We made a nice discovery in the back yard of a brick patio, which was obscured by mountains of trash and debris, plus the treework took way less time than we’d anticipated. On the other hand, we had some unanticipated jacking in the basement, the interior prep work took FOREVER and we may not be able to save the back deck boards. As is typical with most rehabs, some items went over and some went under our budget, which is why it’s vital to have your 10-15% contingency allowance. Always be sure to estimate on the high side, so that you’re covered for worst-case scenarios and if you come in under budget, it’s a pleasant surprise. Without a doubt, most items on your list end up taking longer than you thought and cost more than expected, which is why so many people get wiped out on their first project. An allowance for say, six month’s holding costs also needs to be included, especially in winter in the colder climates because this can add up fast, too.

We believe that our first-time-home-buyer property focus is correct in this market and I’ll give you an update on how we make out in a couple of weeks. We’ll be selling the house under market, so hope to get it sold quickly! Fingers crossed…..

Richard

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Don’t Forget About Google!

So we’ve got this rehab project, nothing major to do, mostly cosmetics and a timeline of just three weeks for the work. One of the items on the do list is repairing large holes in the horsehair plaster walls in a couple of closets. Now if you haven’t done this before, there are probably a number of ways to find out how to go about the repairs.

Some of those might be: talking to a friendly painting contractor, sending a request for suggestions out to your REIA group, talking to other rehabbers, the paint store or perhaps even buy a book on the subject.  Although it’s sitting right there in front of you, don’t forget to do a Google search because it will probably give you all the information you need and then some, in seconds.

I went to Google and got exactly what I needed; most of the recommendations were for Easysand 90 Setting Compound, so that’s what I got and it worked great (make sure you mix it really thoroughly though!). 

So next time you’re about to run around town searching for answers, fire up the laptop first and see what Google has to say, you’ll be glad you did.

Yours in the midst of a rehab,

Richard

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Time To Bring Investors Into The Fold…..

With all this talk about the Bail-out and doing the right thing for our homeowners in distress, the Federal Government would be well-served to turn to the Real Estate Investment Community as a means of alleviating some of the fall-out from the subprime mortgage meltdown.

How about involving and giving incentives to investors, who are able to formulate truly win-win scenarios for people in foreclosure. As a group, we have the tools and resources to take these blighted neighborhoods and replace plywood with new windows, assist the homeowners with their dilemma and offer incoming first time homebuyers the opportunity to get into home ownership.

Real estate investors represent such a powerful catalyst to help slow down this downward spiral - I would love for us to be considered a key component of the plan to get the economy back on track!

What do you think??

Onward!

Richard

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‘Tent Cities’ Starting To Appear…..

Holy moly, I was just crusing around on Google regarding foreclosures and came across a bunch of recent articles regarding the tent cities that are springing up around the country - many of the residents of these makeshift accomodations are having to live in tents because they have lost their houses to foreclosure and can’t afford the increasing rent locally.

In Ontario, California, one such tent city had 20 residents back in July and now it’s already up to 300. Over in Santa Barbara, the city has devoted an entire parking lot to people who are sleeping in their cars and vans. Even in Seattle, tent cities are starting to appear, despite the number of companies expanding locally, plus it gets kinda chilly up there in the Winter!

I’m hopeful that the real estate investment community will be able to continue to provide affordable housing through purchasing distressed real estate and working available loan programs, to assist folks in obtaining a place to live. This type of free market enterprise should be encouraged as a means of alleviating the burden all of these foreclosed homes are placing on the system.

Tough times ahead…… let’s see if we can help out and put food on our own tables in the process.

Richard

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Turnin’ Lemons Into Lemonade…….

Phew, it’s been quite some time since I mentioned the REO packages we’d been looking at - we did finally get to the point of having raised the funds to purchase a  portfolio of eighteen houses from Chase and had done all of our due diligence on the properties, including actual site visits, but despite our ‘proof-of-funds’ and rather congenial manner with the bank on the phone, they still  wouldn’t take less than 65 cents on the dollar.  Bummer.  Back to square one.

Not being ones to allow the moss to grow under our feet,  my partners and I immediately set about investigating the possibilities of establishing a new fund, this time to acquire a large portfolio of defaulted first mortgages. After numerous closed door meetings with S.E.C. attorneys, late night brainstorming sessions and our regular Friday morning breakfasts at The Tilton Diner……voila! The Value Play Note Fund is now in launch mode.

Bail-out…..? Schmail-out, we’re taking the bull by the horns and going after the bad debt that’s been getting everybody down on Wall Street. Take a gander at our intro website at www.ValuePlayNoteFund.com and see what you think. We reckon our timing is perfect, we’re at the optimal time of the year and by golly, we’re going in when most investors are running for the sidelines! Let’s see what we can make of this latest debacle - I’m a firm believer in finding opportunity in turmoil and I’ll keep you posted as we take our next actions over the coming weeks.

Anyone for lemonade?

Richard

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The Trulia/Zillow Showdown

Both are great sites, for sure!  Because of the woes of the market, one might think, however, that these online real estate databases are struggling like the rest of the economy.  “Not so” says Erik Schonfeld with TechCrunch — one of the leading tech industry blogs.

In fact, some of the factoids revealed in his post are quite revealing about the real estate industry’s adoption of online services and resources:

• While Zillow has remained steady with slow growth over the past 12 months, Trulia has almost doubled in monthly visitors.
• Total time spent on Zillow in the past year exceeds 41 MILLION minutes!

We think Erik’s observations and data are a sign of things to come!  The post ends with the excellent question, “What’s YOUR favorite real-estate search site?”  We hope something spiderlicious comes to mind.

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