What I have learned this past year. - Posted by waynepdx

Real Estate Investing
1

Posted by waynepdx on July 13, 2002 at 21:26:46:

I will let you know what it looks like when I can say …I officially give my two weeks notice.

As far as off the wall ideas.

Boy I have had some of them.

One of my favorites is my theory that money motivates sellers. Well it does.

I had convinced myself that sellers that do not have problems that need fixing just needed to be shown why they should be motivated.

I came up with all kinds of hairbrained ways to show them this.

I learned allot from it also and apply that to what I now do daily.

Well heck if you were offered a premium on a property, wouldnt you jump at it.

I was convinced that I could convince anyone out of their property on my terms.

yah right.

2

What I have learned this past year. - Posted by waynepdx

Posted by waynepdx on July 13, 2002 at 20:36:06:

I was reading over my original posts on this board and boy was I filled with big dreams. Well the big dreams are still there, I am just more cautious.

I have redirected my corporation no less than 5 times since I started in this busines.

Brang my family close to bankruptcy twice and ultimately lost them.

There has been many trials and tribulations yet I still trudge on. Yes there will be rough times ahead, but I can actually see the end of the rainbow (financial indepence).

It has taken me longer to get to this point and if I would have shut up and listened I would have been here allot sooner.

I by no means have made it, but I believe I am pretty far into the game.

I just wanted to thank some people for all of their advice.
Ron Starr
Jim-FL
Bronchick
Scott-AL
Dr. Whistler.

And many many more.

I am proud to read your posts and am glad that you take times out of your days to help us newbies out.

Now with that in mind I will give the breakdown of all 8 offers that I have been involved in.

DEal 1- Lease option that fell apart.

Purchase price 208,500. Payments of 1600 with seller paying first two payments and 400 per month applying to purchase price.

Market value was 260k

Spent so much time on finding deals that I lacked the know how to move the property.

Simply gave 30 day notive to vacate and walked from the deal. (I do not recommend this as I could have been sued).

Deal 2- Purchase price of 160k. Market price 180k. Seller make first two payments.

Same exit as number one above.

Next 6 deals were all negotiated with a weasel clause of me finding a tenant/buyer.

Total cost of all 6 deals was (rounded) 500k.

Total monthly payments are (rounded) 5k.

Total income from them (gross rounded) 6,400.

Monthly spread after expenses 1k.

My sellers purchase prices (rounded) 620k.

Total monies recieved from option considerations (35k).

there are 6 month reserves set up for each property, with a newly created umbrella reserve for all properties that 20 percent of net profits go into.

Yep I know I am still feeling the problems from when I first started on my own personal mortgage and it would be easy to just slide some of that cash over to pay off my personal obligations.

But I refuse to do that because It is a constant reminder to me to not screw up again.

The spread I do take for myself from the passive income is used to make up the offset in my w-2 wages as I quit a job and then had to take a job for considerably less when I realized I did not have all of the tools necessary to jump into rei full time.

I have learned some valuable and costly lessons.

In allot of ways I am still a newbie. In some ways I am not.

If I do not know something, I will post the question on here and wait for the answers from the people that have experience in that.

I read a post from someone who I consider to be a god. The way he phrased it made him sound like he had never done a deal before.

That was very humbling to me as I have always had allot of pride.

Well to make it in this business I learned to leave my pride in the car.

3

Re: What I have learned this past year. - Posted by Rob

Posted by Rob on July 15, 2002 at 09:45:39:

Wayne, good for you…I like hearing success stories and yours is one of them.

A few questions:
What has been your best source for L/O deals?
What weasel clause did you use and how did you word it?
How did you get such deep discounts in a Hot R.E. market?

Thanks much

4

Great post, Wayne. - Posted by Michigan Andy

Posted by Michigan Andy on July 13, 2002 at 21:00:38:

It is refreshing to hear someone with the guts to show their mistakes in REI, and not be ashamed. I am far from “making it”, but have a system in place where I do get the bills paid. When I first quit to do REI full-time, I did not have my ducks in a row. There have some pretty lean times the last 15 months, but the bumps sure are starting to smoothe out.

The “smoothing out” is due largely in part to the people I have met on this board, and other local investors with whom I have been able to bounce ideas off of (man, do you come up with some off-the-wall thinking in desperate times).

Your post is a good one, Wayne, IMHO. Hopefully, there are some newbies taking notice, and ensuring they know their exit when they buy, and how to avoid getting stung.

Again, Wayne, thanks for the post. Glad to hear that the end of the rainbow is nearing. Can you tell me what it looks like?

Warmly,

Andy

5

Re: What I have learned this past year. - Posted by waynepdx

Posted by waynepdx on July 16, 2002 at 02:39:11:

1-Best source has been bandit signs. That way I can get the deals before the competition.

2-Weasel clause was that I would get a tenant/buyer.

The first couple I had no weasel clauses…just had them make the first 3 payments into the contract. Now I negotiate the lease option and make it contingent on finding a buyer/seller.

3-I get the steep discounts because the people were extremely motivated. They were willing to basically walk from the properties.

Case in point, Since I do this part time I am “in meetings” during business hours.(thats what I tell em) I’m not lying, I’m meeting with my computer at work and getting things done.

I checked my cell phone today and somehow it was turned back on. Fine…I check my voice messages at lunch, I have 3 voice messages from the same person. I try to call him back and no answer.

When I get off work, he has left an additional 4 messages and each one he is revealing more info…going through divorce, wife still lives there and she cant sell the house. I have the address, what they owe on it, bedrooms, bathrooms etc. He is releasing a little more info each time he leaves a message.

I call him and he is willing to walk from the property. They own 124K that comps at 150-155k.

Also find out that the wife had a restraining order against him and it was just dropped.

So now I get to play relationship counselor. I get her contact info and give her a call. Right off the bat she does not want to have to be in the same room with him. I said that is fine, we can work the deal without either of them having to be together. She has missed the payment and now it is late for this month.

I explain to them that I will make an all cash offer and a lease with an option to purchase offer and that they will need to bring the payment current and make the next three.

She said she has 3k to work with and will send off the payment for this month asap. I call the husband and he says he has 2k to work with and they can cover the payments.

I said great…I will call him at 6pm tomorrow to let him know what numbers I run. (dont need to at this point because I already know what they are).

I also told the wife I would call her back at at 6 also.

I would have went and signed that puppy up TODAY but I had the real estate investors club meeting to go to…and am I glad I did because I learned a ton about allot of stuff and found a fellow investor that I will be forming a great long term business relationship with.