…BECAUSE THEY EQUATE ‘BUSY’ WITH ‘WORKING’!!!

THE PERILS OF TRYING TO HIRE INDEPENDENT CONTRACTORS

Or

HOW TO MAKE SURE YOUR WORST NIGHTMARES DON’T COME TRUE

I was completely BLOWN AWAY by the firestorm I created when I decided to place ads on Craig’s List for an EDITOR and a GRAPHIC ARTIST.

See, the book I’m writing is almost done so I need an editor and someone to design the covers. I know that this process can be a big hassle if you don’t hire the right person. My business mentors Dan Kennedy and Bill Glazer have told horror stories about hiring independent contractors, and how to avoid some big problems. So I decided to follow their recommendations.

The first thing I did was post ads on Craig’s List for an editor and a graphic artist.

 Here are the ads:

Ad #1

“Looking for the right person to help edit my new book.
Please send me your contact information and the following
1) How many books have you edited
2) How many years have you been in the business
3) How long of a turnaround time do you have

I will respond to all inquires with further details.”

Ad #2

“Looking for help with cover for my new book.
Please send me your contact information with the following items
1) Copies of your work (no more than 3 please)
2) Referrals
3) Time in the business
I will respond to all inquires with further details”

Nothing real hard I thought. But I was wrong! I got three e-mails asking how I dare ask such questions and why I thought I deserved more than a resume. Only 15% of the responders forwarded exactly the information I asked for. All the rest sent a link to their web sites and/or wrote about how great they are. Not one asked about the book or about me.

So I sent this response:

“Hello and thank you for your response regarding my need of someone to edit my book.

Please go to my web site and look it over www.pauljdacosta.com. Listen to a video, read a newsletter or my blog. This will give you an idea of who I am and what I do. I want someone who can understand that Real Estate is a business.

I will have the book finished by September 1^st. and it will be around 12 chapters with 10 to 15 pages each chapter. But we can work through that when the time comes. My publisher will take it after it is edited.

After you have done that, if you still want to be considered for the job please send me a short essay as to why you’re the person for the job. My last editor was difficult, did not like my style and felt it was his job to change that instead of editing what I wrote. I plan on avoiding that again at all cost.

Only fax your response to 941-423-7964 only faxes will be accepted at this time.  Thanks Paul”

Can you believe this set some people off?! I got some of the most vicious comments I’ve ever received. One of the mild ones: “… why don’t you send me the budget you’re thinking about, then we’ll laugh at it and tell you to get real…..” This from a “professional”?? Many wanted to know why I felt I deserved such special treatment. Gee, I didn’t realize that asking someone why they are the best person for the job was asking for special treatment.

Most made a point of saying they were busy and did not need someone telling them to look at a body of work just to read a stupid book they are writing. Holy %^&, Batman! And these people actually get hired? God help the person they are working for.

On a good note, I had 3 potential editors send me faxes with the information I requested and we have had phone interviews already. I will be making my decision later this week. These 3 found it quite interesting that I wanted people to respond and write an essay. They asked if I got a lot of responses. I told them mostly e-mails and faxes calling me names!

The graphic artists were not as bad as the potential editors but still went out of their way to criticize me and  demand to know where I got the idea I have the right to ask questions before I hire them. HUH??

 I decided to try 2 artists, and asked them for their ideas. Both of these people thanked me for giving them the chance to show what they can do.

All this tells me that as business owners we must be as diligent about choosing whom we hire as we are about what type of property we purchase. Imagine if I hadn’t asked them to go through all those steps. When would their true persona have surfaced? And how much would it have cost me in time, aggravation and wasted energy to fix the mess?. What sounds like a minor issue could actually become your nightmare.

This is the Million Dollar Question. Recently at my Mastermind meeting this was the hot topic and some people got pretty riled up defending their view on the subject.

Some members felt that all that was needed was to check comps and rental rates or number of sales in the area and you were good to go. Others felt you needed to do complete demographic and area evaluations on every property. I think you need to be somewhere in between depending on where you’re investing.

So let’s look at these areas.

Your local market: You live in the area, work and play there, so you should have a good grasp of what’s going on. How many foreclosures and job losses? Are there government issues? What areas are hot and which ones you should stay clear of? If you don’t know then you need to get busy studying and find out.

Long distance investing: I know lots of investors who live in one area and only invest in other places. I understand that as I am not interested in investing in my home town till the tax, insurance and job situations gets handled, and the local government becomes pro business instead of anti everything.  So investing in other areas is my preferred option. Here is how I go about it.

One of the first things I do is use my 3 Tier Property Evaluation system for a quick assessment. If it doesn’t pass this test I don’t waste any more time on it. If it passes I move to the next level. I get all the available information on the area from the City Chamber, volunteer groups, non profits and the internet. I check the net for stories about crime, taxes and city politics looking for signs the community may be changing for the good or bad. I also search for information from the State on that area and the surrounding area. Most larger areas have some type of business journal and the information there is invaluable. Example: the Atlanta area has The Atlanta Business Chronicle which is an important resource that all investors in the state of Georgia should be reading. It keeps you up to date on which companies are moving in, which are leaving, how many jobs are being created or lost, and the amount of money being spent in the area. I also get back issues of the major newspapers, including local papers. Two areas I always look through are the business section and the help wanted ads for real jobs. Real jobs are professional positions, not just commission type jobs or work from home selling this MLM or stuffing envelopes. The federal Government has lots of very good information about most metropolitan areas in the country so use that resource as well.

Next I contact the president or director of the Chamber of Commerce to arrange a meeting. In some areas that is quite impossible: for example, in Atlanta area the Chamber won’t even talk to you. But one of their sales reps or community specialists almost always will. Be straightforward and tell them you’re thinking of investing in the area and trying to get a good feel for the community. Another person who always has good insight is the local banker. Make it a point to meet with one. A great place to stop for information is the local board of Realtors. They have facts and figures on the market that I want to look at and usually they will help.

After all that if I decide I want to move forward I set up interviews with 5 realtors. I always disclose that I am an investor and a licensed Realtor as well and will be purchasing property to rehab and sell or for long term hold. I give them the area I am interested in and ask them for all the information I will need to make an educated decision. I never tell them what I want, I let them bring what they think is important. I always meet in a public place like Starbucks; can’t go wrong with a cup of joe.

All this might sound like a lot, but I can do all of the above in 2 days and 6 or 7 hours on the net. Small price to pay when you’re investing 100’s of thousands of dollars.

Of the members of my mastermind group only one thought my due diligence was correct; all the others thought it was too in-depth and wasted too much time. But, consider this: the person who agreed with me owns commercial property and SFR all over the U.S.

In the final analysis, you’re responsible for doing your own due diligence. How in depth you go depends on the area and how much you know about it. You need to do enough to know that your investment is protected. Only you can decide how much that is.

 Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at

                            941-716-259                              

  www.pauljdacosta.com  

paul@pauljdacosta.com

“HOUSING MARKET STUMBLES”

I love it when I read these types of headlines. I always get a chuckle and say “So, what did you expect?” The $ 8,000 home buyer credit was not renewed. FHA, Freddie Mac and Fannie Mae have tightened lending requirements. The “BIG BANKS” are imposing their own ridiculous rules on top of the government rules. And you expect the housing market to thrive. To quote a cartoon character, “DOH!”

Here are some of the particulars in the story: The U.S. Census Bureau reports single family housing starts in June fell by 0.7% to a seasonally adjusted annual rate of 454,000. The U.S. started 1.47 million in 2006 before the bubble burst. The article goes on to claim that a variety of factors have led to a flagging confidence including a sluggish labor market, global turmoil and falling stock prices.

I find it amazing that these so called experts in Washington and New York are clueless as to why we are in trouble on all fronts. Let’s take the labor market. I’m no economist or Harvard scholar but I can sure figure out why the job market is in such turmoil. How about the constant barrage of criticism, rules and regulations that keep CEO and the local business owners guessing “what’s next”

Over the past 4 years the auto industry, banking, financial, and insurance industries have been terrorized by Washington and special interest groups. They have to explain everything from CEO pay to why they’re not being green enough for the environmental groups.

Don’t get me wrong, Wall Street and the banking sector went on a GREED spree like none in history. But with that said, all of the banking and financial sectors have been placed under government rule with all kinds of draconian regulations that have stifled creativity and confidence. Washington has taken their typical reactive and not proactive stance.

Now let’s take business, especially big business. They have tax incentives to take jobs overseas. Does it make sense to anyone for businesses to be laying off people here and exporting jobs elsewhere? Obviously it makes good business sense. The biggest complaint is that taxes overseas are better than and not as high as the U.S. This might be the case but I have seen some reports that show most major companies pay very little federal income tax and most get a major credit. So, is it really taxes, or could it be something else? Cheap labor in some third world country may make the quarterly P and L look good for stock holders but eventually that catches up to you when no one here has any money to buy your product.

Global economic turmoil and falling stock prices are all a factor of Governments around the world becoming so big and cumbersome they stifle growth. In some countries the retirement age is 55 and then people live off the government dole for the rest of their lives.Tax rates in some countries are in the 80% range to pay for all the government social programs and an ever increasing portion of the population doesn’t pay taxes at all (sound familiar?). And you wonder why Europe is on the verge of collapse. Is this a model we want to follow??

Back here in the US all we hear from our leaders is negativity. Words matter and you have to understand they say them more for political reasons. A scared population is a compliant one that will agree with your political ideas. And this has worked well: think 9-11, war in Iraq, TARP Stimulus 1 2 or 3 (I forgot, they keep adding them on), saving GM ‘for America’, and the list could go on. In all of these events our leaders increased the fear factor to new heights making people believe if they did not go along all hell was going to break loose and we would all be out on the streets. Americans and most of Europe are paralyzed with fear escalated by our elected leaders. The job market and the housing market won’t turn around till Main Street starts to feel good about its future.   

So what does this mean for Real Estate investors? You need to pick your markets very carefully. The criteria I use is my Three Tier marketing system which was published in my September 2009 newsletter. Here is the link:  http://http://archive.constantcontact.com/fs050/1101755221758/archive/1102703583402.html.

The best markets may not be where you are investing now. For example Florida, my home state, is very anti business. The Government seems to go out of its way to discourage business from moving here. They want tourism, service jobs and retirees. That is living in the past. We need high paying good quality jobs if Florida is to survive and thrive in the market place.

On the other hand, just to our north, Georgia is grabbing every job that brings in good pay, health care and is a asset to the community and the State. Companies from all over the world are signing lease contracts and purchase contracts and plan to hire tens of thousands of Georgians. Both states have housing problems and job losses but one is being proactive and the other is sitting on South Beach having a cold one and taking in the sights!!!Which state will improve faster?

All over the country this is being repeated, with some states fighting for every job while others are living in the past. There have been a number of articles in national publications that more and more companies and people are moving to Southern and Mid Western States. Don’t believe it’s because of the weather. Northern States and Western States are still living in the 50’s and 60’s mentally when government was supposed to know what was best for the people and the business community. They are all super high tax states and still not able to see what their problems are. They are all on the verge of bankruptcy   and they blame everyone but themselves. Think California, New York, New Jersey and any one of the New England states. So as an investor you must really do your homework before you invest in an area especially if you are not from that area. What was a good bet in the past might not be safe any longer.

Due diligence is more important they ever. Take the extra time on this part of your Real Estate business and big profits will come your way. Because the rest of the world is scared to death and can’t or won’t make decisions so profits are there for the taking. You just need to have courage to go where others are afraid to. 

                              Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

http://www.pauljdacosta.com

mailto:paul@pauljdacosta.com

Since the housing crash there have been a number of articles and talking heads lamenting homeownership. The opinion is that it’s just not a good investment anymore and for some people homeownership is just not in their best interests.

Let’s look at this from a long term prospective. Owning a home adds pride for the home owner as well as the neighborhood. You can drive down most streets in most any neighborhood and tell which homes are rented and which are owned by the people living there. Home ownership adds stability to the community and to the tax base. Crime is always less in communities where the majority of homes are owned instead of rented. And let’s not forget about a home’s value. Pride in ownership translates into taking care of the property, adding stability and possibly even increasing its value. Think back to your grandparents or another family member. They bought homes, worked in the community and stayed there till they passed on. Either the surviving spouse or the heirs sold the house and in almost all cases they made a large profit. My own grandparents bought a house, lived there for 35 years and then sold when my grandmother moved to Florida with us. My grandmother was shocked when the house sold for $75,000; they bought it for $ 6,500.00.  

I know you’re going to say times are different; people don’t stay in one place anymore. Yep, you’re right, but in most case they still are better off owning instead of renting.

Some ‘experts’ have the opinion that homeownership is dead. Housing values have plunged and people are losing their shirts. Yes people did buy in the heat of the market. And now the crash has caused their values to plummet. I know you’ve heard this over and over, but it happens to be the brutal truth: for a large number of those deals the people should have never have been allowed to buy the homes, and ‘creative financing’ should have been suspect. No money down deals, loans such as pay option ARM’s  (where you paid a smaller payment with the interest charges adding to the balance on the back end) seemed too good to be true. No one listened.  Even worse, people making 100K were buying a house that cost 700K with no money down with loans that guaranteed failure. ‘No document’ loans were really popular (where buyers were saying they made twice as much as they did and agreeing to 5K a month in payments plus taxes and insurance). And let’s not forget investors who bought homes that they never saw in towns they couldn’t even find on a map. In my town of North Port, Florida I have talked to people who did not even know where North Port was when they bought 2 or 3 houses no money down  and thought they were going to make killing on each one. Well, they know where the city is today, that’s for sure.

How about the people who bought their homes in the late 90’s or early 2000’s and saw the value of the homes double? They went from a low 30 year fixed mortgage to a higher rate 2 year ARM with cash out so they could buy that new truck or a couple of vacations.  That low 2 year mortgage payment doubled when the loan readjusted and now they could not make the new payments.  Add that to the poor economy, job losses, property tax increases, insurance costs increasing and you have the real estate disaster we see. But does all this really justify not owning a home?

In my opinion the cynics are wrong, wrong, WRONG! Not in my lifetime have people been able to buy a home at such great prices and at such low interest rates. If the banks would loosen up the financing to people who could actual afford the home purchase and FHA would stop putting silly requirements (such as the 20% 90 day rule) and banks stop adding their own inane rules we could actually work our way out of this mess.

In my home market here in North Port, and on my own street you can buy a 3 bedroom 2 bath 1780 square foot home for about $100,000. If a buyer were to put 10% down ($10,000) and borrow $90K at 4.75% (30 year fixed mortgage) the payment would be $ 469.48 plus taxes and insurances. The couple next door to me rents this exact house and pays $925.00/ month. Even if taxes and insurance are $350.00/ month it’s still better to own than rent. We will eventually have equity increases when our market gets back on its feet. The interest and property taxes are a write off as well. (But I’m not an accountant so check with your CPA as to your taxes).

In some markets you can buy houses in the mid $50’s to high $70’s and if they qualify for FHA with 3% down the payment would be less than rents in that same market. Let’s look at the payment: $ 70,000 loan amount 5.0% interest 30 years payment=$375.78 plus taxes and insurances.  

What needs to happen is a rational discussion about homeownership and the responsibilities that come with it. People need to understand that when they buy a home they hold its future value in their hands. If they let the place go or keep it up, they control the results. Also people who buy a home must feel secure about their jobs and life in that community. But all we hear is America’s best days are behind her and we are all doomed. This sells news stories (like any bad news) but it just adds to the angst of buyers and they become afraid to make the decision. If the market is going to improve buyers and sellers must realize home prices have changed and it’s one of the best times to buy. Or if you’re a seller and you’re holding out for a better offer you need to really look at the deal you have and how much it is going to cost you to hold on to the house until ‘better’ deals come your way.

The bottom line: for most people owning a home is better than renting in the long run. You must have the courage to look past the cynics and gloom and doom people. You must have the patience and the faith to know that the market will recover. Make the decision for yourself not letting someone else make that decision for you.

          Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com                                                      paul@pauljdacosta.com

There has been a lot of talk from Washington and Wall Street about the continuing housing slump and foreclosure problems. The lament is about how to get the foreclosure rates down and housing moving again. Some say the

$ 8,000.00 first time home buyers credit was a bust.  But consider this:  every house that was sold with the $ 8,000.00 credit was a success because someone just became a homeowner for the first time. Realtors, closing agents, home inspectors, lenders and a host of other people collected a pay check for that one sale.

Washington keeps saying that banks must make funds available to lend. Banks say they are doing just that, and point to all the houses that are reported as sold from the National Association of Realtors and other data collecting agencies. While it’s technically true that there are loans being made, there are not enough to make the impact needed in the market to really get it moving in the right direction. So here is what I feel what must happen if this market is to get moving for real.

1) Congress and the President, as well as the private sector, must stop talking about creating jobs and actually work together to create them. Just as important, they must keep jobs from going elsewhere. Don’t worry I’m not going to get political on you. I’ll leave that to people who have nothing else to amuse them.

American business has to start looking at the long term business plans not just the next quarter.

(Wall Street created this monster) The CEO’s can only care about the next quarter earnings and being a Wall Street favorite. So they sacrifice quality and service, looking for the cheapest labor they can find and cutting corners. This way they hit their numbers, Wall Street is happy, the CEO is considered a genius and the cycle starts all over again. But what really happens is every time people here are laid off, and the jobs are outsourced to a country with fewer regulations and lower wages, it limits the number of people who can afford their product here. It’s a vicious circle.

Now our leaders in Washington have to take as much blame for this as the CEO’s because they make it hard to do business in America. They have so many overlapping regulations and laws it’s impossible to keep track of them. Hiring regulations and tax laws change all the time and each government agency has its own set of requirements. It’s hard to plan your future if the rules changes daily. Fear of lawsuits is a big and costly issue. Employee and consumer safety must be prime considerations, but frivolous and outright stupid lawsuits must be stopped.

 I know the Government and Private sector can work together to solve this and many more issues. The economy will not get better if people don’t have jobs or feel their job is next to be eliminated.  Spending will not increase as these people will either not have the income, or will hold on to what they do have, just in case.

2) Banks and other agencies must give us a true picture on the actual number of homes that have been foreclosed on and that are behind on payments. The number of homes that are reported and the numbers of homes that are on the market are not even close. Conventional wisdom says that there is a big ‘shadow inventory’ out there that nobody wants to talk about. This is flat out wrong.  But until people have a clear picture of the problem how do we know how to fix it? And Government alone is not capable of changing this perception. Until this is revealed people will not feel comfortable making any decisions and will take a wait- and-see approach.

3) Finally the housing market is not going to improve if the banking and the financing industries continue to refuse to work with the small investor. A large number of the foreclosed homes are in complete disarray and are unable to be sold to an end user. So this only leaves the investor class to pick up these properties and make them usable. But banks and other agencies have put so many hurdles in the way of small investors it’s hard to get a deal done. Private cash is available but harder to raise because of the reasons stated above. FHA with the 90 day rules and 180 day rules makes it almost impossible to fix a house up and sell it to an end user quickly. These rules don’t help home buyers at all, but somebody in Washington feels that they have the right to dictate how much money an investor can make. And the banks add their own set of rules on top of the Government. Some of the big banks won’t even loan money on a house that the owner has owned for less than 90 days. And others dictate how much profit investors can make for up to 6 months. (These rules, however, don’t apply to the banks themselves)

It’s the small investor who will restart the housing market, not the big institutional investor who buys 500 homes at a time ( and who, by the way, still needs to sell to someone)  The small investor is the key to the whole recovery. Banks and the government need to work together to allow the small investor to buy homes and fix them up and sell them or keep them for their rental portfolio.

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com

paul@pauljdacosta.com

And It Doesn’t Matter Whether You’re a Real Estate Investor or a Realtor…

Every now and then a member of my Real Estate Group asks this question: Is doing an open house more profitable when you do it as a licensed Realtor? I do open houses both as a Realtor, and as an investor in states where I don’t hold a license and my answer is:

I do both types the same way, no changes, and I always get traffic!!!

First, you must plan your open house at least 5 weeks in advance. This is not the time to do spur-of-the-moment things hoping for traffic. You must plan in order to generate traffic. I always do the following before I even schedule the date.

Here are 6 things I ALWAYS include to make my Open House work:

®    If your house is listed ask your realtor to supply you with the names and complete addresses (including e-mail and phone numbers) for all the realtors who have sold at least one home in your zip code or within 3 miles of your property (if the neighborhoods are similar). Then ask your realtor to break down the list to find agents who have sold 2 or more homes. Don’t worry, in most cases it is not more than 10 to 15% of list. My recent list had 235 realtors and only 28 had sold more than 2 homes.

®    I know what you’re thinking: I’m not a Realtor and don’t have access to the MLS. I am licensed in Georgia only, but have property in 6 States. If you have your properties listed your realtor can supply the info. If you’re selling them yourself just ask a Realtor to get the information for you. When I do it this way I pay $ 10.00 per hour. It takes about 8 to 10 hours depending on the size of your area and number of sales. This will be a very targeted list as all names will have sold homes in your area. And if you have ever bought a list from a names broker you’ll know this is a low price.

®    After I have the names I sort them into in two groups (2 saIes, more than 2 sales). Then I do the following: The large list I send to Handy Mailing (Call Julie at 316-944-2231; she handles most of my printing and mailing needs). I also send her the flyer I had made for my property. She prints and sends them to the names on the list so they arrive about 7 to 10 days before the open house. Then I have my web guru (Steve Tickner 941-228-7810) upload all the e-mail addresses into my web server. I send them emails at the following times: 2 weeks out; 10 days; 7 days; 5 days; 3 days; day before; and the day of the open house. I have the Realtor e-mail the flyer to their office and contact lists. I also upload the flyer to my social networking sites (like Yahoo and Face book) to let everyone know about my open house.

®    Now for the small list: this is the list of realtors who have multiple sales in your market. I have a 3 page sales letter I send telling them the reason I’m contacting them is that I know they are among the top sales people in the area and I want them to see my houses and bring me a contract. I offer the buyer a few bonuses such as $ 2,000 in closing costs and a home warranty. For the agent I offer them 4% commission and $ 100.00 gas card. Along with the letter I have mock checks showing them what the commission would be and a DVD of the house. (I have a DVD made of each house; cost is $ 99.00). The video company I use puts the DVD up on their web site with its own URL, so I go to Go Daddy and buy the domain name for my property. I always use the street address.

www.3021delmonicodrive.com

www.2880belvederelane.com

(The URL’s also go on all my E-mails and social media sites). I send this packet to the top agents so they get it between 7 and 10 days before the open house. Remember, they are also receiving the Emails as well. Right before the scheduled date, I call each one of the top Realtors to see if they got the letter and answer any questions they might have. I personally ask them to please show and sell my home.

®    Another media type I make use of is the local paper. Most of the areas I have homes in have a number of papers, and I usually choose 2. I include the number of bedrooms, baths, address, open house hours and the web site address. I also buy extra 3 lines on top and 3 extra lines on the bottom and bold the whole add. This way it’s bigger than all the other ads and stands out.

®     And the final thing I do is put out signs. I use a combination of hand-written and pre-printed. I like to use the arrow open house signs that are pre-printed as they stand out better and the ‘sign police’ leave them alone. I usually put the signs out late Friday; you need to do what is best for your area. I also display a 4 x5 banner on the house on Wednesday before the open house date.

These actions and your advance planning will drive traffic to your open houses, whether you are a Realtor or an investor.

 1181 South Sumter Blvd suite 301 North Port Florida 34287 941-716-2597

695 Mansell Road Suite 120 Roswell Georgia 30076 678-287-4800

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at

941-716-2597

www.pauljdacosta.com

paul@pauljdacosta.com

I’ve talked to hundreds of Realtors and REO specialists about contract offers and the biggest complaint I hear is (and pardon the French) “…the offer sucks!” The price is in line but the bidder did not follow the bank’s requirements to submit a bid. Too many investors and Realtors think it’s ok to skip a few unimportant steps when submitting an offer, as long as they name a good price.

When you fail to submit all the required documentation with your offer, the lender is probably going to put it in the dead pile. They don’t care what’s missing, they just care that anything missing means more time and effort on their end. The Realtor is required to present all offers but the seller is not required to look at all offers. So, unless every required item is included your deal is dead on arrival.

You lost another deal. Why? Your offer did not solve the Bank’s problem..

Let’s look at this from the banker’s point of view. More than likely they are handling properties from a few counties to all over the place in a small state. That must be taken into consideration: they may have 100’s of properties to manage and 50 different realtors calling on deals and problems with the properties.

This is why your offer must address the bank’s problem as well. If you submit a half-baked offer or an incomplete offer the lender doesn’t have the time to deal with it. Period. The bank representative has to deal with the realtors and with his/her supervisor as to why these properties are not yet under contract. S/he is being pulled from both ends and they feel the pressure. It’s your job to solve that problem. Every month the representative has reports showing how many loans they have closed. This may translate to a bonus. Is your offer going to add to that for the month or quarter? If not, you lose.

You bid over the asking price and still lost? Read your own offer. Would you accept it????

I’m dead serious about this one. Look at your own offer from the lender’s perspective. Would you accept it? My close friends in the business tell me stories about offers that make them laugh until their sides hurt. Here is a list of the biggest ones. Remember, you’re buying a foreclosed home from a bank.

·       My wife is not home now she will sign it later

·       I can’t close for 120 days

·       I have to sell my other house first

·       Well just loan me the money since you already own the house

·       Offer contingent on wife’s approval ( bet this made the wall of idiots)

·       Will you loan me the money to fix it since I am doing you a favor and buying this house?

And the list goes on but you get the idea:

Not all deals for Foreclosed properties revolve around the offer price. Your contract may be the problem.

Let’s take some time to look at the offer. First, read all the requirements from the lender. You can offer full price but if you haven’t submitted all the required documentation you’re not going to get taken seriously.

A lot of banks require you to get approved with one of their accepted lenders first. You’re not required to close with that lender, but the bank wants to make sure you can get the loan. I have been told if their lenders say you’re not approved…. Next! (See, your price was not the issue)

I’m surprised at how many people fail to supply proof of funds. The money must be liquid or you must be able to get it in a few days.

A big problem is a buyer who says he is buying the home cash, but is actually financing it. This is not a good idea because you lose the mortgage contingency in the offer and you may lose your earnest money. (OUCH)

Two of the bank’s biggest concerns in an offer are the right to inspect and the closing date. So let’s take each one by itself.

Right to inspect. Some Realtors have told me their buyers wanted 30 days to inspect because the house was a mess and they wanted to make sure of the rehab cost. This is all well and good but if your contractor needs 30 days to figure out a bid, get another contractor.  No bank or seller should ever have to keep a property off the market that long while you do your due diligence.

Closing date is a big issue for the banks. Remember, they answer to Wall Street (and now the Federal Government) and the faster they can get a non performing asset off the books the better (Remember they have a problem and you’re there to fix it) So know when they report to the SEC and Wall Street. This is easy: Google it. I personally think your realtor should do this but I wouldn’t hold my breath. Be ready to close when you make your offer.

I’ve presented some very compelling ideas on making offers and getting your bids accepted. But you must also do your homework before you present an offer.

When I am looking for a home I go through the following steps every time. It’s like the pre-flight checklist- nothing is omitted.

·       Is the contractor available for the whole day and ready to give me bids on the spot? (Don’t buy the “I need time to check the prices” excuse. Both of you should know the cost of carpet and light fixtures, appliances, etc) They and you should have a rough estimate of the electrical costs and A/C

·       Have the funds in place and liquid so all you have to do is wire transfer funds to the closing attorney

·       Know the comps in the area on foreclosed and rehabbed homes. Bring your laptop so you can get on the web right there and figure out the issue

·       Have the MLS sheets, owner information and due diligence on the bank done before you go out. The bank information will make a difference in your offer

·       And be prepared to buy a house if it fits into your buying program.

Good luck!

 Paul

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com

paul@pauljdacosta.com

I sure hope not! But we are going to tackle that here.

One of the reasons you must know the cost per day (CPD) is to know how much of a penalty to charge your vendors if they don’t perform duties on time.

I understand some of the experts say just figure $ 100.00 to

$ 200.00 per day. I disagree with this because each investment will cost a different dollar amount and your financing may also be different. Also when a vendor asks where you came up with that number, what will you say? Yes. I know you don’t have to answer but it’s important that you know it.

All you need is a spreadsheet program, like Excel. If you would like me to send you the one I use, just forward me an e-mail with your complete name and e-mail address.

You should include the following items. You may not need all of them in every case, depending on your deal. I calculate all my deals based on a 90 day ownership.

§  Cost of home.

§  All closing costs.

§  Rehab costs, all vendors

§  Insurance cost.

§  Yearly Taxes (divided by 4).

§  Interest on borrowed funds (divided by 4)

§  Lost interest on your cash funds (divided by 4)

§  Lawn maintenance

§  Ads for property

§  Accounting fees

§  Attorney fees

§  Mileage

§  Your time on a per hour rate (I calculate 20 hours per deal) at   $ 200.00 per hour.

§  Advil (8 tablet per day)

§  Rolaids (6 per day)

§  Bottle of Jack…

Other than that, add what you need to make your deal work. In order to know that your investments are worthwhile, you must know what your deals cost per day.

Paul J Da Costa

Is a licensed Realtor in Georgia. He is a Real Estate investor, educator, and national speaker.

Paul is available for select speaking engagements and can be reached at 941-716-2597

www.pauljdacosta.com