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7 Real Estate Wholesaling Power Tips from Billionaire Sam Zell

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on Wednesday, 17 February 2016
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What can every real estate wholesaler learn from billionaire investor Sam Zell?

Sam Zell is head of America’s largest apartment REIT, and worth around $5B. He’s been throw multiple real estate cycles, and is famous for compiling a $3B portfolio of distressed property from banks, with a down payment of just $1 on some of them. He’s also known for flipping a whole portfolio to Blackstone for $39B just before the biggest dip in the last down turn. Needless to say; he knows a thing or two about flipping properties, and winning no matter what is happening out there. So what can he teach us about wholesaling today?

1. It’s All About Supply and Demand

Winning in business, and especially the real estate business is all about supply and demand. There is still significant supply of distressed properties to be tapped out there. Without wholesalers other investors and retail buyers don’t have the supply they need.

2. Look for Markets with Pent-Up Demand

If you aren’t getting the traction you need on the flip side look for markets where there is already great demand for wholesale properties. Where are investors searching, but are coming up short on inventory? Zell has found this in a variety of places, and even has one office which is open 24 hours a day, 7 days a week, which he says is full of buyers around the clock.

3. Serve Others by Taking Bad Assets off their Hands

Some aspiring wholesalers are conflicted by the prospect of picking up homes on the cheap from desperate sellers. If you are transparent, and are making fair offers given the dynamics of the situation you are providing a valuable and desperately needed service. Don’t underestimate your value and the importance of what you do. Do good business, and operate from a position of confidence.

4. Understand the Downside

Sam Zell says that what continues to cause investors to fail and get crushed is that they never see the downside coming. They always become over confident and optimistic about the market and begin to believe “it’s different this time.” Zell has been through enough rotations (profitably) to tell you that it isn’t different. Trying to stop the turning of economic cycles is almost as challenging as stopping the earth from rotating. The good news is that wholesalers can profit during all cycles – if they buy right. That is providing they bid on properties well and build in enough profit to cover the unexpected.

5. Leverage is Great

Zell and his companies juggle billions of dollars in financing. For Zell it is all about getting the right mental perspective on this. He says he sleeps well owing billions of dollars. That works when you have structured deals well and are confident in your position and success.

6. Liquidity is King

Leverage is so powerful in part because it enables investors to stay liquid. By using transactional funding real estate wholesalers can finance 100% of their deals, while keeping their cash on hand to stay flexible and agile.

7. Influence Your Own Destiny

Like Warren Buffett, Sam Zell also takes big positions in the investments he tackles. Whether it is a controlling interest in a business or partnership, having a sizable audience that will be your recommendations without thinking twice, or controlling enough local real estate that you can control the values – there are numerous ways to influence your own destiny. Ask how you can more strategically make acquisitions, and build a following, so that you can control the market and your own outcomes?

 

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

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Bank REOs Surge 50% in 2015

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on Wednesday, 03 June 2015
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Distressed property opportunities are surging in 2015. So where are they, and who’s buying?

While some newbie real estate investors that have gotten into the industry since 2008 have been griping about a lack of deals, the data shows there are even more distressed properties coming up for sale. In fact; according to the stats there are twice as many.

Rocketing REOs

While some appear to have forgotten there was a foreclosure crisis RealtyTrac reports that bank owned properties leapt up 50% year over year to April 2015. There are a lot more distressed properties in the works too. RealtyTrac reports an almost equivalent number of pre-foreclosures and auction properties too. The Mortgage Bankers Association reporting commercial and multifamily delinquency rates reveals that the number of Fannie Mae loans that were 60+ days delinquent almost doubled in Q1 2015 as well. Many of these are properties which aren’t even included in foreclosure figures yet.

California Foreclosures and Fast Growing Markets

It’s no secret that California has been one of the fastest rebounding housing markets in America. In fact, it dominates Realtor.com’s recent list of the hottest US real estate markets; claiming 10 of 20 places. Yet, even in CA where property prices are up, and days on market are shrinking RealtyTrac says bank owned REOs have climbed even higher; by 74%.

Demand is up too. Online listing portal Realtor.com says visitor numbers have doubled in 2015. So more distressed properties are coming down the pipe. But there are plenty of buyers eagerly looking to snap them up. These are perfect conditions for real estate wholesalers that can virtually flip an unlimited number of house deals using transactional funding.

 

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

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Real Estate Investing: Just Saying No to REOs

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on Tuesday, 07 August 2012
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Is it time to “Just say no to REOs” and find a better source of distressed properties?

RIP for REOs?

In any other industry manipulating inventory and fixing prices would result in major public outcry, high profile investigations and massive lawsuits. There is no question that banks and mortgage holders are doing this with all of the shadow inventory being held back and the bidding wars which are ensuing.

These institutions have already been found guilty of incredible amounts of foreclosure fraud and in many cases foreclosure auction rigging too and have essentially gotten away without being penalized. SO why wouldn’t they do it with REOs?

Of course if the numbers still work for real estate investing and profit can be made then there is no reason not to buy these homes except for snubbing these lenders. However, this does not mean investors should go as far as over paying or buying on speculation alone.

Some REOs may still be good deals, other not so much. Either way it is still obvious that real estate investors ought to be fishing for deals in new directions.

2 Easy Solutions for Finding Deals with Less Competition

1. Look to New Areas

If your local market is way too hot like Sacramento or Miami or Phoenix then way not look a little further afield for real estate investing deals?

Perhaps even 100 miles away there are great destinations ripe for the picking. One example of this is Bonita Springs in Southwest Florida, a little over 100 miles from Miami, just south of the sizzling Cape Coral market and bordering one of the wealthiest cities in the world, Naples to the south. The area is financial stable, has great potential for growth, yet often floats under the radar and there are off market homes and some which have been sitting on the market. Investors will find single family homes here from $70,000 to just over $100k a few blocks from the ocean and $10 million mansions. Other similar markets could be Mobile, AL and pockets of CA.

2. Streamlining Mass Direct Marketing

There are still a huge number of motivated sellers out there but so far it has been extremely challenging for solo investors and small real estate investing companies to reach them due to time constraints. However, by using auto dialers and bulk SMS investors can slash labor and connect with live leads all day long, while covering a much larger share of the market.

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How to Find More Local Distressed Property Deals

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on Wednesday, 25 July 2012
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Real estate investors fed up with over-demanding lenders asking lofty prices for REOs and trying to sift through endless junk ‘wholesale’ deals online could find that they have been overlooking golden opportunities closer to home.

Consider these 6 new ways to identify local distressed property deals and find new leads:

1. Note Buyers

Note investing has become a hot trend recently and means many new investors acquiring distressed property notes which they are in turn offering modifications or principal reductions on for homeowners or foreclosing on them with plenty of equity to spare. These could be great opportunities for picking up bargain priced homes without having to deal with banks.

2. Aged Internet Leads

When borrowers first go into default the get burnt out by all the phone calls, marketing mail and offers of help they receive and often choose to do nothing out of frustration. However, after a few months the pressure on them builds and they are often more receptive to purchase offers. Acquiring these aged leads can often increase conversion ratios for real estate investors and lowers lead cost from many dollars to cents apiece.

3. For Rent Signs

Instead of just scouting the neighborhood for new Realtor and FSBO signs hunting for rent signs can bring distressed property leads with less competition. Distressed homeowners will often try to rent their homes first when they can’t afford them or need to relocate because they don’t believe they can sell if they are underwater. With a little coaching these can be great prospects.

4. Code Violations

Cities are cracking down harder on home maintenance, dishing out code violations and fines for simply forgetting to mow the lawn for a couple of weeks. Many homeowners, especially those who are already struggling can’t keep up with these demands. Make offers on these.

5. Arrest Reports

While potentially harder to piece together watching arrest reports could unveil some highly motivated sellers desperate for bail money or needing to put together cash for a defense attorney. Domestic violence cases also frequently mean homes being abandoned or needing to be sold. Attorneys, bail bonds offices and even cops could be a great lead course here.

6. Divorces

Divorces frequently mean homes need to be sold and one if not two parties needing to find new housing for a double dip on leads. Try tapping divorce attorneys and even potentially relationship counselors for a constant flow of these distressed property leads.
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