Is a foreclosure your best option?

You watch the news and see many companies downsizing and plants idling. Real Estate has all but been written off by the media. I even read in Newsweek that home builders have all but written off 2009. The word foreclosure is now the new marketing “Buzzword” for Realtors. You hear that word and you think, bargain. All around town I see real estate signs that actually say “Foreclosure” on it like it is a good thing. I had one realtor tell me he received a call on one of his listings from a sign and the first question out of the prospects mouth was “Is this a foreclosure, if it’s not I don’t want to see it?” The foreclosure has really come to the forefront of the current real estate cycle that we are in. The foreclosure market is also the media darling at this time, so is this the best opportunity for you?
Before you jump on the foreclosure band wagon you need to ask yourself a couple of questions. Is this worth the time investment that I will have, and is the money it take to complete the project worth it in the end? We will talk about exit strategies more in the next week. I am sure you have heard that just because something is cheap doesn’t make it a good deal. All over the media it is plastered that you can buy houses 60 cents on the dollar, and I had an investor tell me that he purchased a house for 25 cents on the dollar. So what does this actually mean when you are done. To give you some background on me, the last 6 months I have bought two foreclosed properties. I have a client who has bought 13 through me in the past 8 months, and have showed countless other foreclosed properties in the area. I am stating this because I want you to know that I have experience when dealing with these homes.
This first part I want to discuss is time. For every one of these homes that myself or my client has bought we probably looked at close to 20 in person and at least 50 on paper. I spend at least an hour a day reviewing houses and at least 3 hours a week going into and getting cost for repairs together. Next, it is usually a month to get these homes back to market or in rentable shape. So you need to make a real commitment if you are going to find a deal.
Next, cheap doesn’t necessarily mean a good deal. There are so many hidden costs in getting one of these homes back to market. You need to make sure that if you are doing the estimating you have a good handle on the costs, or you could hire an inspector, but that is going to run you about $300. This may be money well spent if you are going to be making a substantial investment in these homes. It should help speed your learning curve, and could save you thousands in mistakes further down the road. If you have a partner that has been remodeling for years, you will have an advantage here.
If you are looking at purchasing one as a home owner, you need to take extra care. Human instinct draws us towards advertisements like “Good Deal,” “Best Deal in Town,” “Discount,” and of course “Foreclosure.” What actually happens when you buy most of that cheap stuff. If breaks, it has some sort of defect that you may be able to live with but would be too costly to repair, in worst case scenarios, you could end up spending a lot more money to cover the mistake than it would of to put the extra money in up front. This can be a real issue in the foreclosure category.
I am going to give a real example of two houses located in the popular “Colonial Village” community. Both are +/- 1100 Sq. Ft. Cape Cods. One is a move in ready Cape Cod that sold for approx 83K and the other was government owned that sold for around 60K. These numbers I am giving are strictly my opinion, but I feel are an accurate representation of my point. The 83K house didn’t need anything, but lets say you didn’t like the color so you spent 2K to change it. Should be high, but it puts you into the house for 87K. You have the other cape cod that you just picked up for 60k. This home has been sitting with out any climate controls for months causing cracking of the plaster and leaving a lot of deferred maintenance. Here are the numbers off my bid sheet. For kitchen update we had $7500. Redo all floorings we had $2.5 per sq ft. This totals out to $2887. Bathroom we had $3100. Paint/drywall repair $3600. Landscape $1000. New Doors/trim $1900. This was because we needed to replace a slider and put trim through out the house. Mechanicals would have been $2200. The roof and fencing also needed maintenance at approximately $2000. This brings the total of repair to just under $23000. Let’s say it takes you two months to repair it. You will have at least a thousand dollars of holding costs or if you paid cash, lost opportunity cost.
If you add it all together it comes out to $84,000 that you would have effectively has into that home. So as a home owner you would have had two invest two extra months living somewhere else, and would have had close to the same money into your home. If you are really handy around a house (which is not me), this may be a great opportunity for sweat equity. If you haven’t done it before, think out your costs. My old football coach always said, “if it was easy everyone would be doing it.” Same scenario here.
This is not meant to scare you, but just to get you thinking. A foreclosed property may be your best bet. And when you look hard enough there are good deals that need minimal work. Be careful when you hear the word discount. Before you buy the “good deal” take time to assess your skills, and write down what your needs are before just finding a house. In other words, think about your lifestyle first, then find the property that suites that. If you have any questions, please feel free to email, or call me anytime. Good luck in your house hunting!

Stay Warm! Network Online.

After being back in the cold for a few days, I can see why facebook, linked-in and all of the other online networking groups are growing at exponential rates. IT’S COLD OUTSIDE! Lets face it, when the temperature stays in the single digits for this long of a period, it really makes it hard to justify spending a lot of time outside interacting with fellow man. That’s ok, it is forcing to do something that I have been meaning to get done a long time ago. Giving me the time to really make my online profiles shine.
I have had a myspace page for the last year and have a lot of fun connecting with old friends and seeing what they have been up to the last few years. At the builder’s show it was great to catch up with other volunteers on the Sales and Marketing Committee and see what they have been up to in their business. It was exciting to see their networking groups and I have added a couple of links to my blog. Theses guys have written some great articles and have some really good resources to view about the economy today. I will be posting local market numbers by Jan 30.
I have also just started building my profile at activerain.com, which is a site built for the networking of active salespeople in the real estate profession. If you want to find out more about what is going on in the real estate industry go check out the blogs and read the profiles. I will also be building a profile on facebook and linkedin.com. I am excited to expand networking opportunities. I will put the links on the side of this blog as well. Please link your profiles when you get a chance.
One of the most exciting online programs we have going this year is the revamp of lifeinlansing.com. The site has been redesigned and is much more user friendly. TasteofLansing and lansingareaevents.com are all being rolled into the site. We will have online forums and places to review local restaurants and hotspots. We are looking for subject matter experts in different fields that would be willing to write columns, or basically blog for the site in its different fields. There is not a lot in the way of tangible returns, we can’t pay because this is a grass roots effort, and you would have to buy your own food at the restaurants and clubs until they see what great value we have here and start sending us meal tickets to get us to show up. Until then, it should be more than rewarding in the fact you get to influence how people spend their hard earned entertainments dollars. Also, it gives you a chance to really show off your expertise in a particular field, and lets face it, on some level we all love to give reviews and share our experiences.
I am trying to keep these short, so I will wrap up. Stay out of the cold and on your computer (unless you are going out to look at a house). I am really excited to work on my online profiles and connect with people to see what they have going on. I am excited to expand on the web and see who I get to run into. I also can’t wait to show you all the new LifeinLansing.com site. I hope you find it useful and exciting. Please share your ideas and experiences either here, or send me an email. Have a great week.

International Builders Show has Education at forefront

I am writing from the sky as I travel back from Beautiful Las Vegas Nevada returning from the International Builders Show. I know, I know, what could possibly be good about an expo and conference devoted to the housing industry? Despite the fact attendance was off one area that really seemed to be utilized this year was the education courses. I facilitated two seminars in the “Meet the Experts Series” They were “Dealing with Clients with Homes to Sell” and “Getting Along with Realtor’s.” This is my third time talking at IBS, and at each of the previous courses I have had 20-30 people. This year I had 70 and 50 respectively. Now, these courses are informal round table discussions, and mine were scheduled at 8 am in Vegas! Some of the regular education courses that I attended had as many as 500 people in them.
I have always been devoted to education and when the market challenges us to get creative in what we do, it is nice to see many others turning to the same thing. Those of you who have been attending courses in your field over the past few years, congrats, you are ahead of the curve. Those beginning to educate themselves in their field, don’t get discouraged. It is never too late to start.
One of the greatest values I received out there was the positive reinforcement from all of the other volunteers and staff that are part of the Sales and Marketing Council. Many famous speakers talk about how important it is too go to seminars to sharpen your mind and get a positive charge. This time it was even more important. As I volunteer time with sales trainers and other sales professionals around the country, we feed off of each others positive energy. It is exciting electrifying helps me realize how lucky I am to be in this profession. By the time I got this plane, I couldn’t wait to get back to Zero degree temperatures to start showing the value of our New Home Communities, and tell Lansing how great real estate is.
Now I am not saying that this is the best market ever. Though, if you are a purchaser it just may be. Two years ago if you were a seller, it was your time for your house to shine. Don’t be bitter if you bought a house in the last three years and you watched your value tank as fast as your 401K. I know it burns a little bit too see prices erode like they have. Even many experts, including myself with 11 years experience bought a house 3 years ago and got too see my equity disappear as well. I still believe that everyone should own at least one home, and if you are an active investor you should have real estate in your portfolio.
2008 was a trying year for a lot of families. I have told every realtor that I have talked too since Mid December that I am really excited about 2009. A few of them have looked at me really funny and asked why? I know it is going to be great year because I choose it to be. Even as I leave 60 degrees and sunshine and head back to clouds and cold, getting that recharge reinforces how great I have it, even in a market that has already been written off by mainstream media. One thought to keep in mind. When the media starts reporting good news about the housing industry, it will be too late for the best opportunities. They will have already passed. It doesn’t mean that housing won’t be good after that, but those that do their homework, get educated about the market, learn to read the indicators that are available will be the ones to receive the greatest gains. Keep positive, Keep educated and resolve to have your 2009 as Joel Osteen puts it “Your Best Year Yet!”

Goals, education, and a propserous 2009

Sorry it has been a little while since I have written. This year has really started out with both feet hitting the ground running. I am adding another link that is focused to new construction sales people. This site features podcasts from some of the top sales people and trainers in this field. There is still a lot of good material for salespeople in other fields. You can also search under Jerry Rouleau under I -tunes and subscribe for weekly updates.
Education and training are the keys to my success in real estate. If you look at the top people in just about every field in the world, almost all of them will tell you that they are constantly learning and practicing to continually get better. Setting goals is also a common theme that you will see attributed to success by every reputable coach and almost every self improvement book I have read. One of my goals for my education last year was to read fifteen books, three more than I read last year. I achieved it and have moved my goal to 17 this year. I will be posting my reading list in the next week. If you are interested in a quick worksheet on goal setting, check out my documents link on the side f this blog under 12 steps for setting goals. This is a summary form a talk given by Brian Tracy. I have a link to his homepage under motivation.
Despite what you hear in the media, I really feel that this is going to be a great year. The opportunities are just a little different, but by having clear goals and a plan to follow I am excited to watch this year unfold. If you have any great tips on goal setting please feel free to add them in the comments section.
One last piece of news, I am really excited to be heading to the International builders show on Jan 17th. If you would like more information on the largest trade show in the US for the building industry check out www.buildersshow.com. I hope this year brings you everything you ask for.