WHO MOVED MY MARKET?
Have you heard the doom and gloom on the television and in the newspaper about the market? Or, maybe you heard the doom and gloom from individuals around you? Well I am here to tell you that your market is still here, you just need to know what to do in your market. I have been investing in real estate since 1998. I started rehabbing and selling for cash. That lasted about four years until 911 came and changed the market. I then changed from retailing to holding property. I rented and lease optioned houses, I still did some retailing but not as many. I was very picky as to what houses I was going to buy and retail making sure that it had all the amenities so it would sell quicker. The market changed again so I started buying and selling foreclosures by discounting the mortgages with the banks (short sales) and selling the property for less to make a profit in between. The savvy investors know when it is time to change what they are doing in real estate and change with the market.
There are some markets that were so hot that no more did you place a sign out front of the property in the morning, by the afternoon you would have full price offer. That was the good old days. Then there are some markets that you place a sign out in front of the property and it takes days or months to sell and depending upon the price of the home, it could take a year. Knowing “Who Moved My Market” and how you need to change will help you be successful in the real estate world.
It is hard to stay up beat on the market unless you stay around positive people who are of like minds with the same goals in life. We have a group that meets every month and we noticed that some individuals where being sucked up into listening to the “nay sayers”. It was starting to affect them personally and starting to infect our group like a virus. We decided that our inner circle of C.A.S.H. Group needed to realize that Change is Good and that you just need to understand what to do. We decided to read a book called “Who Moved My Cheese?” by Spencer Johnson in our meeting. It took about 45 minutes and then afterwards we discussed what the book was about and how it related to us right now. Having this discussion was so powerful. It helped everyone see eye to eye. I would like to share some things about the book and help you understand that “Change is Good”.
In the book there are 4 characters and maybe you can see yourself in one or all of these characters, one time or another:
Sniff– who sniffs out change early
Scurry – who scurries into action
Hem – who denies and resists change as he fears it will lead to something worse or
Haw – who learns to adapt in time when he sees changing leads to something better!
Taking a hard look at yourself or people you are around will help you become a better real estate investor. In fact, it will help you either makes millions understanding the different personalities and who you are.
Let’s start off with Sniff. Are you like Sniff, could you see the change in the market coming? Were you ready to make the change in the way you invest in real estate? As I mentioned above, I was buying, rehabbing and selling houses in the first four years of my real estate career. I started noticing the change in the market right around 911. My buyers were getting harder to qualify. The mortgage company was tightening up on some of their guidelines.
So what did I do? I turned into to Scurry. I started taking my houses that I had for sale on the market which was 6 at the time and started lease optioning them. The reason why I changed was because I couldn’t find a qualified buyer and I was making mortgage payments on 6 houses. I chose to lease option the houses rather than rent. I already knew based on my experience that I received a different type of clientele if I lease optioned versus just a renter. I also knew that I could ask for more money down as a non-refundable option fee versus a security deposit. You can also get a little higher rent if you lease option. However, note if there a lot of houses for the Renter to choose from you need to fill your house immediately, so you will want to keep your rent amount the same as if you are just renting the property. This way, you will have a better selection picking the BEST out of the WORST. Some of my houses had a higher monthly mortgage payment than what I could get for the rental amount so I computed the non-refundable option over a 12 month period and added it to the rental amount that I would receive to determine the total amount that I was receiving monthly for my property.
The market started changing again. The Wave of Foreclosure was coming and I was riding the wave but not as big as I could have ridden it. When foreclosures started flooding the market, I knew that I could make a lot of money if I learned how to do foreclosure (short sales). I was working in the Michigan market at that time and working on 60 to 75 short sales. We were very successful with the short sale process. Then the market changed again in Michigan because of the shut downs of the automobile plants, companies moving out of state and the possible buyers having no income to qualify to buy my houses. I could still sell short sale houses but I couldn’t do it on the volume that I wanted.
Well, I turned into Hem. I did not want to leave my market. I could have stayed in Michigan and closed on a house a month but that was not my vision. My vision was to have a team of investors working together with a common goal. The goal was to help Sellers, Banks, Buyers, Investors and ourselves. I knew in my heart that if I relocated to some place warm, that the Wave of Foreclosures would be bigger and better. I knew that the baby boomers didn’t want to move to Michigan in my area where I lived when they retired. I knew that if I was going to do volume, I needed to move. Now remember this was a personal choice, I could have stayed in Michigan and purchased properties and kept them as rentals making a boat load of money. However, my goal wasn’t to purchase rentals it was to buy and sell houses for quick profits. I already had plenty of rentals.
In April of 2006, we decided to leave Michigan and I turned into Haw. I researched where I wanted to move and not only where I wanted to move but where baby boomers wanted to move. In July of 2006, I had let my staff go except for a full time secretary that still runs my business today in Michigan. We packed up, leased optioned our personal house and kept the rentals that we had. We left Michigan and came to Sunny Florida. Since coming here we now have control of over 22 million dollars worth of property with students and my partner, Hunter Paschall. We are able to work the foreclosure market and help hundreds of sellers, banks, buyers, investors and ourselves.
Things are going great in this market. But wait …. You say how can that be? Who Moved My Market? You see, the Floridians were use to having a hot market and putting a sign up in the morning and selling the house by the afternoon. But, a Michigander was use to a slow market. I knew how to be more creative to sell the properties. This is what I saw and still see in the Florida market:
There are still a lot of foreclosures heading our way. Learning how to short sale will make you lots of money over the next 2 years. If you are not interested in short saling, learning how to do subject to’s (taking a property subject to the existing financing) is another way to profit in real estate. There are going to be a lot of individuals that will not be able to make their house payment because it is an adjustable mortgage payment, they can’t sell the house fast enough to avoid foreclosure so now would be a great time to pick up some of the subject to’s houses. However, you need to pay attention to your exist strategy. If the property has an adjustable rate mortgage and you plan on keeping it as a rental or lease option property, make sure that the amount of rent that you collect will cover the payment or you will have to pay the difference. What is more common is that you will be able to pick up the subject to property and then resell it making a profit if it has enough equity versus holding the property for long term due to the adjustable rate mortgage.
Purchasing properties to hold as either rentals or lease options is another great strategy. Just remember if the monthly mortgage payment is higher than the average rent, you must be able to get a non-refundable option to make up the difference. Investors who have houses vacant need to think creative to fill their houses. I have let a renter move in for as little as $400.00 with rent being $600.00 per month in Michigan or in Florida I would say move in for as little as $1,000 with rent being $1,200.00. I have made arrangements with the Tenant/Buyer pay a little more per month towards the security deposit to make of the difference, but again it depends on if you need to fill your house. Don’t hold out for the big check if you NEED to fill your house. Remember, sometimes making up the difference on what your mortgage payment is versus what you are receiving on rent, might be the best way for you to weather the storm.
Can you still Wholesale Property in this market? The answer is YES, just give yourself 60 days to find your buyer versus 30 days. Can you buy, rehab and sell property in this market? The answer is YES, just figure in 3 extra months on selling the property.
So, I ask you which personal trait are you? Are you Sniff, Scurry, Hem or Haw? Ask yourself “Who Moved My Market” and what am I going to do about it? Remember Change is Good. Now is the time for you to make a boat load of money by helping the people in your own community. The average homeowner does not know what options they have available and when you tell them how you can help, you will be rewarded and so will they.
In closing I just hope this Article helps you consider that you might need to change, as you see, I changed and you can too. It may be you need to get some new training. It’s not what it is going to cost, you it’s what it’s going to make you. A smart real estate investor needs to move when the market moves if you want to stay successful. You can keep doing the same old thing and get the same old results, if that’s working for you great. If it’s not that is called the circle of sameness, remember, Change is Good.
STOP listening to the “nay sayers”. You know what experience you have in real estate you just need to look within and make a decision, AM I GOING TO CHANGE? Plug into a mentor and a group that will give you all the support you need to help you become successful and never let anyone change your dreams. I wish you all the best in your real estate investing career and I will see you at the top.
Kimberlee Frank
321-392-4395
