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The Six Steps of Foreclosure Investing

  1. Purchase a piece of Real Estate that is undervalued…I used to drive around and use 4 or 5 different realtors to find me deals…none of them had a system.  Our system consists of these steps, the first of which is purchasing a piece of real estate that is undervalued.  I will help you find that piece of real estate.  I use a variety of tactics and connections to develop a robust selection of foreclosures, bank owned properties and rehabs that can be profitable if managed the appropriate way.

  2. Rehab the property.The first mistake that real estate investors make is putting too much money into a property.  I have watched investors rehab homes with the following strategy:  I want this place to look like a home I would live in…this is a mistake in my opinion.  I rehab homes to the point that they are livable and will appraise out where I feel the value is.  If the property is designed to buy and sell, then keep in mind it should show like a model…new kitchens and baths for example are a good idea.  I like tan walls, white trim, neutral decor and new carpet.  If the property is designed for a buy and rent, I will keep the rehab light…make it nice…make it neat, but don’t dump tons of money into the property.   When the tenant moves out in 1,2 or 3 years for example, you will have to rehab the property again if you plan to sell!!  When I started in the rehab business I purchased older homes that were outdated and needed cosmetics…since then I have done more intensive work, but I no longer rehab the homes myself.  I suggest leveraging one of our 4 crews.  I use these same crews myself and we have been able to take advantage of their expertise by keeping them busy.  They are constantly working and therefore can provide us with some phenomenal pricing deals.  Some crews specialize in lighter work and others specialize in more intense rehabs.

  3. Rent the property.  We have leasing agents who can help you with this process, but I stress the word help.  It is ultimately the investor’s job to make sure your investment is profitable.  THERE ARE NO GUARANTEES IN THIS BUSINESS!!  The only guarantee is that if this business were a piece of cake…everyone would be doing it. Advertisements in the paper have helped me immensely.  I have an ad that I use religiously and I have never had a difficult time with getting renters…very few investors do…but if you think I am going to wave a magic wand and rent your property you are crazy.  The ad is a must, a sign in the yard is a must and keeping the price competitive is also a must.  Do not think you can quit your job and live off of rental income right away.  THIS WILL TAKE A LONG TIME TO HAPPEN!!  But it can happen!!

  4. Cash out Refinance the property. There is a section on how this works.  For now just understand that when you refinance and take cash out, you open up the door to getting some or all of your initial investment back so that you can grow your portfolio of real estate.

  5. Manage the property. Take care of your tenants.  My tenants love me because I treat them with respect and respond to their maintenance needs quickly.  I don’t currently have much in the way of maintenance, but there are the occasional calls.When I got into this business I budgeted for a lot of maintenance calls and headaches…this has not been a problem as I have put together a rehab/handyman crew that will handle these concerns.

  6. Retire Wealthy. As you begin to sell off parts of your portfolio, you will really experience the most exhilarating portion of this process; Cashing In. By selling some of your portfolio after you have held for over 12 months, you will capitalize on tax law. Current tax law treats any asset you've held longer than 12 months as a long term capital gain. Your exposure is limited to 15% once you've held the home longer than 12 months. There are incredible benefits to holding properties for a number of years. The most successful investors hold units for several years and experience the best returns.  Value appreciation, asset depreciation and tax ramifications  lend incredible benefits to holding real estate.

    By cashing in on your portfolio you will yield the fruits of your diligent planning and labor. With equity injections of $20,000 - $50,000 you will be experiencing large injections of capital on a consistent basis. If you have aggressively invested, you should have a portfolio of 15 - 20 projects.  These projects should provide you $250,000 - $500,000 in new capital over the next few years as you cash in. This type of capital for most people is life changing. This can pay for a new home, increase your standard of living or merely allow for greater investments with other foreclosed units.

    Cash in on your portfolio could take years, but will payoff in ways that you can only imagine.  Continue to build your portfolio and remember this program is designed to build assets for the future.  In just a few years you will be extremely satisfied with your decision to invest in real estate.