Author: Pete Sanchez III

My husband and I started doing short sales back in 2008. He had branded him self as the San Diego Short Sale Kid. He was very blessed to be mentored and still by 2 amazing local Carlsbad investors here who have done over 500+ deals.

 They taught us very well on SHORT SALES. A short sale is simple. If you have a property that’s worth $150,000 and let’s say it has a first mortgage for $100,000 and a second mortgage for $40,000-what that means is the total debt on that property, or the total mortgages, is $140,000. Being a real estate investor, I wouldn’t want to buy a $150,000 house for $140,000. It doesn’t make sense.

 A short sale is when you get the bank to not take $140,000, you get them to take less, like $85,000. The banks are going to do this for several reasons. First, they’re going to have a lot of expenses that are associated with a foreclosure. They’re going to have realtor’s costs, foreclosure costs, holding costs, repair costs-they’re going to have all sorts of fees associated with a foreclosure.

Inevitably, the bank is only going to recoup somewhere around 70% of the value of the property. That’s why banks will take short sales on foreclosures. The natural follow-up to that is, “Why are foreclosures such a hot commodity right now, and why is there a lot of buzz about them?”

 The thing is that a lot of folks may recall this brief refinance boom we’ve been going through, which is important. People went out and got a lot of mortgages called “Adjustable Rate Mortgages,” which have an extraordinarily low interest rate to start, let’s say 3% in some cases. But in a couple of years, maybe two to five, depending on the term of the Adjustable Rate Mortgage, their rate is going to go up, it’s going to adjust upward.

  So, people went out and bought more house than they could normally afford, or they refinanced, got the low payments, and bought a car that they couldn’t afford if their payment had to adjust upward. What’s going to happen here in the next two to five years is that all these ARMs are going to be adjusting upward, and that’s critical because people aren’t going to be able to afford them.

They aren’t going to be able to afford them because they didn’t count on it, and because inflation is outpacing wage growth. All of this sounds great, but you may say, “How is that going to affect my business?”

Here’s the way it affects your foreclosure real estate business. If you’re in a judicial foreclosure State, where properties that are in foreclosure go through a judicial process before a foreclosure is complete; or a non-judicial foreclosure State, where the properties go through a trustee as they’re going through a foreclosure-you’re going to see less and less equity in these properties.

So if you know, like I said earlier, that banks are going to take short sales because of the numbers-meaning they have to pay all of these expenses-and the foreclosed properties aren’t going to have a lot of equity in them, you have to be able to negotiate short sales effectively if you’re going to be working in the foreclosure market.

The foreclosure market represents the most motivated sellers. Traditionally, with motivated sellers, you’ll find good deals. That’s why banks are going to take foreclosures on the conditions that are spurring on all these foreclosures. It’s an amazing phenomenon that we’re working on right now.

Folks might also ask about a common [inaudible]. Well, what if we’re in a real estate bubble? If we’re in a real estate bubble, that means values are going to go down, which means folks are going to owe more than what their property is worth. Again, negotiating short sales is going to be critical to your success in the foreclosure business. If we’re not in a bubble, that’s fine too.

We already [backed out] the numbers; still negotiating short sales is going to be critical to your real estate business because people are borrowing up to, and sometimes above 100% of the value of their property. Whatever way you slice it, as far as having a skill, negotiating short sales is probably, in my opinion, one of the most lucrative skills that someone can have as a real estate investor.”

The make it or break it to short sales is that BPO/APPRAISAL meeting. Make sure you meet that person with what I call AMMUNITION which is your own appraisal, property inspection report, termite report, sex offender/crime reports in the area, 2-3 estimate of repairs, and title reports showing title encumbrances. Basically, you’re going in to meet the appraiser like an attorney and your job is to make your case on why the appraisal needs to come in around your offer price.

Hope you liked this content.

Gisela Sanchez
Get this FREE REPORT 5 ways to find motivated sellers at www.InvestorTrainee.com

Over the last years, events have unfolded that have reminded me of an important truism in real estate investing.    “Always have a back-up!”

The market is the last couple years is very competitive as you already know it. Many times, where I thought I had a deal locked up to have it crumble before my eyes. Don’t ever stop prospecting for more deals. If you feel like you have something solid don’t stop prospecting to manage that project. Hire it out. Your main role as real estate investor is to continue being the entrepreneur and don’t stop prospecting for deals.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:
 – Hard money brokers
 – Appraisers for quick value assessments
 – Rehab crew leaders
 – Plumbers
 – Electricians
 – Roofers
 – HVAC techs
 – Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice.  Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each.  Thing happen.  Life happens!  Be prepared for it.

Don’t stop there.  Have back-ups when you rent or sell a property.  A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant.  So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone.  This is despite being hot for the house an hour earlier!  If you are in this business long, you will learn that people will disappoint you and they will fool you.  So, establish policies and make one of them “it ain’t rented until it’s paid for!”
Encourage back-up offers to purchase.  Deals fall through all the time!  Take as many back-up offers as you can. 

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor.  In addition, rearranging your core team is thinking big and long term.  It’s a constant process of improvement and adjustment.  This approach is crucial to your business!  Apply this principle and profit!

Your Realtor,
 Gisela N Sanchez

There are several important things you need to be successful in real estate investing, one of which is a great team. I’m going to talk briefly about who should be on the winning team:

1. Your Mentor – every successful entrepreneur needs a good mentor. A guide. By training under the watchful eye of one smarter than us, we can only get smarter. Start at your local investment club.
2. Mortgage Broker – you want someone who has the experience of working with other investors. They need to be creative and smart!
3. Real Estate Attorney – it is important to have someone on the team who can go through contracts, and who knows the legalities of all your moves.
4. Escrow Officer or Title Rep- having a good one on the team helps to close deals that much quicker. You always want people looking out for YOUR interests.
5. Accountant – Preferably a CPA (Certified Public Accountant). Your numbers guy should also be well aware of the ins and outs of real estate. Come tax time, this is the man to help you through the write-offs!
6. Insurance Agent – It is always better having an insurance rep that is looking out for you when things hit the fan.
7. Contractor- The good contractor seems like the hardest one to find, but can often make or break your profit margin. You want someone who gets things done on time and under budget!
8. Supportive Family & Friends – Having the support and backing of loved ones is important in any endeavor.
9. Realtor- To help you with MLS access, determining ARV, and much more.
10. Property Manager- someone to watch over your investments
11. Great Handyman – Someone to take care of the little things that come up on a daily basis.
    Assembling the team will not happen overnight, but once together, they will give you the backing and help you’ll need to make your real estate investing dreams come true.

Whether you are BRAND NEW to real estate investing or an expert in the game, it’s critical that you understand these 7 Simple Steps to real estate investing in San Diego,CA.

First things first…
• Real Estate is NOT a get rich quick scheme. However, if you learn the foundations and put them into practice, you will make more than enough money to realize any and all of your dreams and goals.

• No One know if the market is going to burst or not! The real estate market will, however, shift and the real estate market will change – just as it always has! What’s “hot” now may turn ice cold in the next 3 years (or perhaps even 3 months). But, there are ways to “bubble proof” your real estate investments. It’s actually quite simple.

Did you know that in the United States, in 1975, the median home price was $33,300? In 2005, the median home price was $195,000. Historically, the average home doubled every 7 years. If you do the math, it should be well over $200,000.

OK… Now, having said that… The real estate market WILL change and what is “working” today in real estate may not in the future…  The rental market was strong a decade ago, but has been soft in recent years. We are getting ready for a turn once again.

Real Estate IS a cycle… and cycles have some degree of predictability. With predictability, you can grow your real estate business into a cash-producing, profit-pulling machine that runs itself WITH the changing real estate market trends. It is still possible to make money in real estate. In fact, now is just as good a time as any to get started in real estate investing.

But, you’ve got to make wise investments. Sure, you may make some SERIOUS cash in pre-construction, but what happens if (no, not if – when) the market shifts and there are suddenly 35 identical properties on the market for sale in the same building? How long can you afford to carry a negative cash flow on the property?

Or how about taking over property ‘subject to’? Sure, it’s a great strategy and lenders may be inclined to turn the other way and not exercise the “due on sale” clause as long as the interest rates are at rock bottom prices (You know, those sellers that you’re usually taking property subject to from usually don’t have the lowest interest rates, right?) If the interest rates spike to 10-11%, don’t you think lenders might be MUCH MORE inclined to exercise their option to make you pay off the 6.5% note?

What this means is simply that you must be experienced in the basics – the tried and true techniques, strategies and systems that have worked in the past, are STILL working and will work in the future. You’ve got to have all the tools in your bag so that you can go with the flow and not be affected when real estate markets begin to shift (which they are already in the process of doing, in case you’ve missed that memo! 😉

Step #1 – Set your plan: Figure out what your long term real estate goals are (aka retirement and wealth building) and figure out what your short-term needs are with regard to making money in real estate. Then, set up the proper entities and put the plan in place. 

Step #2 – Determine what your target market will be: You cannot be all things to all real estate markets. If foreclosures appeal to you, start investing in the foreclosure market. If you want to be a landlord, look to out of state owners to focus your real estate marketing efforts.

Step #3 – Be consistent and persistent: Real Estate is not a get rich quick scheme. Real Estate is get wealthy over time and put some quick cash in your pocket today. You’ve got to follow your plan and stick with it to see real results in real estate. You’ve also got to continue to increase your education and your experience.

Step 4 – Don’t fall into the “Analysis Paralysis”: Learn to analyze properties quickly. Don’t get caught up overthinking. It’s quite simple actually: What’s the property worth? What does the property need for repairs? And how much can you get the property for? It all comes down to numbers!

Step 5 – Become a master of finance! Real estate is the business of marketing and finance. You must learn about mortgages and interest rates and loan programs that are out there. You must know how to use finance to negotiate your deals and to sell your properties.

Step #6 – Become a skilled problem solver: The reason you will get real estate deals that others don’t, is because you are able to solve people’s problems. Anything goes on the real estate playing field. You’ve got to be ready!

Step #7 – You must continue your education: It is important that you are always investing in your education and learning new tactics, strategies and tips that will help you make more in real estate. 

If you’d like to learn the business come to one of our local investor meetings in your area nationwide. Go Now to www.InvestorTrainee.com

To Your Success,

Big Block Realty.
Gisela N Sanchez

Before you read the article below, if you’d like a FREE report on “5 Top ways to find motivated sellers” go to www.investortrainee.com

San Diego Real estate investing is always good and sometimes it’s red hot. When it’s hot dozens of real estate seminars begin rolling across the country and thousands of people spend thousands of dollars for investing education.It’s startling to learn that of all those thousands of eager folks who attend these seminars only about 5% buy even one investment house. Why? The real estate gurus sell the “sizzle” and make profiting from real estate sound easy. The truth is that it’s simple, but not easy. Here’s a quick plan that will enable anyone to begin building financial independence.

There are basically four steps to investing in single family homes:

1. Buy San Diego homes below full market value. Yes, people really do sell homes for less than the home’s full value. The key is to understand that most San Diego home owners will only consider a purchase offer that is all cash and within 5% to 10% of their asking price. The successful investor learns to find financially distressed home owners who have no choice but to sell for less than market value. They have lost their job or been suddenly transferred; they are divorcing; they been living beyond their income; the family has been overwhelmed with medical bills and, not uncommonly these days, their money has gone to support a drug habit.

Those are examples of motivated sellers. They must sell, and they will accept something other than a conventional, all cash offer.

2. How do you find motivated sellers in San Diego? You work at it! Like any business it is important to develop a little marketing plan. One that is simple, yet very effective, is the one that was proven 75 years ago by the Fuller Brush company; door to door sales. You are selling your skill as a home buyer to people who must sell. You are there when they need you and you have the skill to help them solve at least part of their problem. With door to door prospecting you will learn more and buy more homes quicker than any other method. However, most people just won’t walk door to door for three or four hours per week. OK, there are other ways.You can watch public notices for the announcement of foreclosure sales. Meeting with a home owner right after they’ve received a notice that they are about to lose their home allows you to deal with a very motivated seller. Other public notices that provide buying opportunities include probate, divorce and bankruptcy. You can follow the Homes for Sale listings in your local newspaper or Internet site. You can telephone the names found in these notices or, and this is the least time consuming, send a postcard expressing your interest in buying their property. It will produce buying opportunities, just not as many as personal contact.

3. After you’ve found a motivated seller you must understand how to frame offers that provide benefits for both you and for the home owner. A good real estate investor quickly learns that this is not a business of stealing property, but of solving problems in a way that benefits the seller.The home owner is in a tight spot of some kind and you can save them from public embarrassment and, in most cases, give them at least a little cash to get a new start.No investor can afford to leave cash in every deal. No one but Bill Gates has that much available money. You must use creative techniques like, leases, option and taking over mortgage payments. Little or no cash is needed for those deals.  

4. You make your profit when you buy! Never make a purchase until you’ve carefully determined exactly how you will get to your profit. If you hold it as a long-term investment will the monthly rental income more than cover the monthly mortgage payment? Will you sell the deal to another investor for fast cash? Will you do some fix-up and sell the property for full value? Will you quickly trade it for a more desirable property? Have a plan before you buy.
There you have four steps that even a part-time investor can execute in three to four hours per week. What’s the missing ingredient? Your determination and perseverance. If you will unfailingly follow the plan for a few months, you will be well on your way to financial independence.

Again if you haven’t already gotten your free report on “5 Top ways to find motivated sellers” in your area make sure to go to www.investortrainee.com

To your success,
Gisela Sanchez