I don’t just promote real estate investing courses…I actually *GASP* use them.

Last year I picked up a copy of Rob Swanson’s “Leads In An Hour” course, and I immediately jumped in, and went to town, devouring and watching all of the videos and read through all of the PDFs.

Once I was done with the course, something happened…

Something that maybe has even happened to you…

I did absolutely nothing with the information!

Yes, I had all the knowledge in my head, but I was too lazy to take action.

A year went by , and still nothing was done with this course.

However, I had hired a new virtual assistant, and had her go through the course.

A few weeks later, she struck gold!

Here’s my short story, and the net result of my team finally taking action with Rob’s “Leads In An Hour” course:

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Today Zillow announce that it would acquire Trulia for $3.5 Billion in a stock for stock transaction.  You can read the entire press release from Zillow here.

The deal is expected to close sometime in 2015.  What this means for us as investors remains to be seen, but I’m curious to see what this does to each company, and more specifically, their websites.

Everyone is familiar with the famous “Zestimate”, and Trulia recently released their own property valuation metric.

For me personally, I tend to prefer Trulia when doing research on a property, although Zillow seems to have better information and records about property taxes.

Which one is your favorite, and what do you see in the future?  Leave your comments below…

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Take a look at this picture, showing you what we’ve done in closings in April 2013:

Can you imagine making more in 10 days than most people make in year?

Heck, that’s more than most people make in 2-3 years…

And my partner and I did it all in 10 days…

(Well actually, from start to finish it took a lot more than 10 days, but as you can see, the 3 closing took place within 10 days).

So why I am posting pictures of incoming wires on my blog?

It’s not:

• To show off or brag about how great I am
• To try and make you feel bad
• Because I have nothing better to do with my time

The reason am I emailing you pictures of my latest incoming wires is because I want to:

• Let you know what is possible when you really dedicate yourself to real estate investing
• Let you know that although I send a lot of emails and write blog posts about different products and services in real estate investing, I actually walk the walk and close deals myself
• Sincerely help a handful of people get to the same level (over $238k in 10 days) as me

So How Can I Help You?

There are 3 things that I’m going to roll out here to help you achieve your goals this year and beyond:

1. Private one-on-one coaching– this is where you get access to my personal email, personal cell phone, and one-on-one
private access to me.  (I only have the time to take on 2 people for private coaching…keep reading to find out how you can become one of them)

2. Exclusive, Elite Mastermind– we’ll meet 3 times per year in fun, exciting locations where you’ll discover the true power of the Mastermind: having other super successful real estate investors help you with your road blocks, and hold you accountable for making the necessary improvements to your business.  (There’s space for 4 people in the mastermind)

3. “Spend A Day”– You can travel to meet with us, or we can come to your office/hometown and visit you. You can have us spend either 1, 2 or even 3 days with you (and your team) as we completely review, overhaul, and then set up your real estate investing business. (We have time to do this for only 3 people).

How Much Does This Cost?

This is NOT cheap…it’s a premium service. If you’re down to your few hundred bucks, I’m sorry, but I can’t help you.

However, if you are:

• Ready to take your investing business to the next level
• Ready to quit your J.O.B. and go full time with real estate investing
• Looking to network, mastermind and learn from other like-minded people

…then this is definitely for you!

What Do I Do Next?

Don’t worry, there isn’t some web form you have to fill out, and you certainly won’t have some sales person calling you up trying to sell you on something.

This is a unique, limited experience to work directly with me (and my partners).  But don’t worry, I will ALWAYS be there for you (and you won’t be pawned off on some $20/hour coach)…

So if you’re interested, send an email to: justin AT REIMarketingTips DOT com, and answer the following 8 simple questions:

1. Name
2. Phone number & best email
3. City you live in
4. City you want to invest in
5. How many deals have you done in your life?
6. How many deals have you done year to date?
7. Are you interested in one-on-one coaching, the mastermind, or the “Spend A Day”, or a combination of all 3?
8. What you think would be a fair price for what you selected in question #7?  (Again, as a reminder, this is NOT a cheap service. If you don’t have the funds to spend on this, that’s okay, it just means that it’s not a fit for us to work together right now)

Simply reply via email to: justin AT REIMarketingTips DOT com with the answers to your 8 questions, and we’ll get back to you ASAP.

Have a great weekend,

Justin

PS- Is you life and investing business going as well as you would like it to?  If not, ask yourself what you need to do differently? My guess is insight and help from someone who has done the things you would like to accomplish.

Don’t forget, even superstars like Tiger Woods and Michael Jordan have coaches and mastermind with the best…
Read the rest of this entry »

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Back in January I wrote a 3 part blog post series on “How & Why Real Estate Investing Is Changing”.  If you missed it, you can read part I here.  In it, I talked about how real estate investing in 2013 and beyond really is changing.  Specifically, I talked about how big “Hedge Funds” are now looking beyond Wall Street, and buying good old fashioned real estate as a way of diversifying their portfolios.

But after I wrote that, between Facebook, Twitter, and emails directly back to me (although no one was brave enough to leave a comment on the actual blog post), I was told that you can’t flip a house to a hedge fund.

I was told that you’d be more likely to meet Santa Claus or the Easter Bunny than you would be able to flip a property to Hedge Fund.  While I didn’t appreciate all the negativity, when I got the email, I have to admit, I had personally yet to flip a house to a Hedge Fund, let alone even have a Hedge Fund contact to flip one to.  However that all changed last week…

Last week I went down to Seattle to look at a property that was a lead I had been “nurturing” since before Christmas.  The lead came from a test mailing I did on a direct mail campaign I did following criteria laid out by my friend Cris Chico in his “Virtual Wholesaling” course.

So last week I went down to meet with my realtor down there, to get an idea of the zip code where the deal was, and the competition, and inspect the subject property to see if I wanted to flip it, or keep it and rehab it myself.

This Is Where My Trip Became VERY Interesting

My agent told me that if I wanted to flip the home, their other “investor” might be interested.  When we started chatting about this other investor, I was shocked to learn that they were a Hedge Fund!  Yes, sitting right next to Santa and the Easter Bunny I was, getting all of the glorious details about this investor’s criteria.

Just so you know that this is real, below is their criteria for Seattle (please note that this is almost certainly different is every city across the country.  I’m just sharing this with you as a point of reference, and to hopefully inspire you):

• They are looking at houses under $350,000 (again, this due to the high housing costs in Seattle.  If you’re in a more “normally” priced market, that number is probably much lower)
• The maximum amount of renovation work they are willing to put into a property is $30,000
• Their goals is to buy at 85% of FMV, but this is flexible
• The agent even gave me a list of the areas that the Hedge Fund is most bullish on (can you say “targeted marketing!”?)
• In King County, their desired gross yield is 8-8.5%.  In Snohomish County (suburbs) it’s 9-10%

Let’s take a look at that gross yield number for a second.  In Snohomish County, since I know that it’s 9-10%, that means that if I flip a house to a Hedge Fund for $200,000, the fund expects it to generate a gross rental income of $18,000-20,000 per year (or a monthly rental amount of $1,500-1,667).

So What Can I Now Do With This Powerful Iformation?

Well, there’s a few things:

• I can “reverse engineer” from the rentals section of Craigslist and if the rent to cost ratio is even in the ballpark.
• I can target certain parts of the county where I know the numbers make sense.
• I can go ahead unlisted deals and FSBO’s because I know my numbers
• It’s a heck of a lot easier to buy a home at 85% of FMV then it is to get it for 60% of FMV (the target price if you’re flipping to a traditional wholesaler)
• If you’re a fix and flip person like me, you can take the skinnier deals and wholesale them to one of the best cash buyers around: a Hedge Fund!

Now one thing you have to realize is that I didn’t go out looking for a Hedge Fund buyer.  This literally fell into my lap.  But if you’ve ever been on any of my coaching calls, you know that one of my favorite expressions is “Real estate investing is a contact sport: the more contacts you make, the better you will do!”

So What Does This Mean For You?

Well, for one I can tell you that Hedge Funds buying real estate are absolutely, positively, happening right now, all over America.  This is your chance to get out there and there find them!  If you need more help in this area, you can always check out what my friends are doing over at Real Estate Mogul, a great learning place for cutting edge strategies like these.

If you have any questions, feel free to post them below.  Also, if you like the new design and layout of the blog, let me know, and send us some love by sharing it on Twitter & Facebook!

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So by now you’ve already made your new year’s resolutions, and (hopefully) come up with a game plan on how to “Make 2013 Your Best Year Ever” (yes, a tired cliche that was emailed out everywhere last week).

Guess what?

I still haven’t made my 2013 plan!

The reason?

I’m still reviewing 2012’s results, seeing what worked, what didn’t, what enjoyed, what I didn’t, and what I can improve on.

Am I late to the party?

Sure, a little bit.

But last year I also noticed something in my business.  I think back to a famous quote, one that I heard real estate investing legend Ron LeGrand:

“The Less I Do The More I Make”

That’s what I’m all about in 2013:

Fewer deals with bigger margins.  I’m looking at blocks of houses, not just individual ones.  I’m looking at raw land, and the possibility of sub-dividing it and flipping it to a developer.

I do have a couple of “new” things in the works however.  But they are small, low impact, and possibly high return endeavors.  The first is that I’ve launched my first ever “Meetup Group”.  Are you familiar with meetup.com?  It’s a place to go and find other like minded individuals about specific topics.  It could be anything from real estate investing to cooking to working out to mother or father groups.  If you have an interest, there’s a probably a meetup.com group for it in your town.

Why am I launching a meetup group?  Two mains reasons: 

1.  I genuinely want to help people in Canada invest in USA real estate.  Especially since real estate in Canada (especially Vancouver, the 2nd most unaffordable city in the world when it comes to housing) is way overpriced.  If I can show someone here how to invest in real estate (much like I do with people who read my blog and my emails), and they can close a deal and make some extra money, that would make me happy.

2.  Selfishly I’m looking for more partners.  Specifically, I’m looking for more private money lenders to fund my buy, fix and flip business in San Diego, and I’m also looking for joint venture (equity partners) to help us on bigger development deals, and also for buying blocks of houses that we’ll hold/keep for cash flow.

If you’re looking for more buyers or private lenders, I would strongly encourage you to start your own meetup in your own city.  The cost is $72 for the year (payable to meetup.com).  But if you set your group up correctly, you instantly establish yourself as an authority in your local market.  Heck, I bet that you’ll even have deals brought to you.  Go ahead and start one!

The other new “project” that I have on tap for this year is to write another book.  Only this time, it won’t be about deep frying turkeys; instead, it will be about the life that Dreama and I have built for ourselves, which we owe primarily to real estate investing and earning an income online.

It will be a guide for how to get out of the rat race, and instead live a happy, fulfilling life.  When it comes time for book reviews, don’t you worry, I’ll be asking you for your help!

Speaking of you, how can I further help you in 2013?

• Is it by joint venturing with you?
• Buying your deals?  (If you have blocks of houses that can become cashflow rentals, I’m interested)
• Helping you with private money? (I plan on raising a lot of it this year)

I’d like to for you to let me know.  Just a leave a comment at the bottom of this post.

Finally, what information would you like to see more of this year?  I am pretty well connected in the entire real estate education industry, but I want to know what you would like to learn more about.

Also, in what format would you like to learn?

• Do you want to read more PDFs and reports?
• Attend more webinars?
• Listen in on teleseminars?
• Watch more videos?

In case you haven’t noticed, we barely did ANY webinars in the 2nd half of last year.  The reason is twofold: first, there weren’t really any good webinars to share with you.  Secondly, I noticed a drastic reduction in webinar attendance last year.  Why is this?  Maybe if you could let me know below this post, it would help me to deliver better, more relevant information to you.

In closing, I’m excited about 2013, but only because I plan on making more money by working (and more importantly “doing”) less than I did in previous years.

Can I do it?

Only time will tell.

What I do know is that I want to hear from you, below, about how I can help you and what kind of information you want to see more of this year.

Enjoy 2013.  I know I will!

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-This is the 3rd and final post in the “How & Why Real Estate Investing Is Changing” series.  If you haven’t already, you should go back and read part 1 and part 2 first.-

In our last post we established the fact that in 2013 and beyond, you’ll need to do a better job of finding your leads (and not using the MLS) because as we’ve already identified, hedge funds are coming to your city next (if they’re not already there) and starting to gobble up inventory.

We also agreed that instead of trying to compete with the hedge funds, you’d be wiser to actually work with them.  With that being said, a lot of you might be curious as to exactly how to do that, so let’s jump right into it.

What Exactly Are Hedge Funds Looking For & Buying?

 
The first thing you’ll need to do is to figure out if hedge funds are buying in your local market.  If they’re not, then this exercise will be good preparation for when they arrive.  However, if they’re already there, then you’ll need to figure out what they want.

You’ll want to start out by figuring out what they are buying.  You can do some quick and easy research by heading down to your local county’s foreclosure auction.  Hang out there for a few days.  Ask around as to who is buying what.  Track some properties: their address, and how much they sold for.  Pay close attention to who bought what, and how much they paid for it.  Chat up the investors and bidders at the auction.  You have to go and attend for a few days, but you’ll start to see some familiar faces who can give you some good intel.

For these hedge funds, their strategy is to buy and hold real estate to get a specific yield.  The yield is a specific ROI.  I’ve spoken to other investors who have told me that in their local area, hedge funds are looking for a yield of 9-11%.  That’s all they care about.

Now here’s where your opportunity is: the hedge funds are getting their inventory from a couple of primary sources: the MLS and the auctions.  In other words, if you want to flip a home to a hedge fund, DO NOT look for deals there.  Look for deals in places the hedge funds aren’t.  In other words, if you can bring them an off market deal, you are bringing something of VALUE to them, and they’ll be interested.

So what that means is to start busting your hump looking at FSBOs and on sites like Craigslist.  Remember, all you care about is the yield.  Let’s give a real world example.  Let’s take a yield of 10% on a $100,000 home.  That means the fund wants to get back $10,000 per year, or $833/month in rent.

So what you do is find homes, and then run the rental comps (you can use a site like RentoMeter) to determine your yield and see if you have a “deal”.  The great thing about this model is unlike flippers to rehabbers (like myself) who want to buy at 70% of ARV minus cost of repairs, you can find deals slightly below retail value, and sell them to the hedge funds.

Once you’ve found a deal that fits into the hedge fund’s yield criteria, set up an appointment with the seller, head out, and get the deal under contract.  The great part about this strategy is that you don’t need a massive spread.  You can easily make $10,000 per deal, and there’s a ton of them out there.

How The Heck Do I Flip A Home To A Hedge Fund?

 
At first this might sound like a daunting task, because you can’t just look up “hedge funds” in the yellow pages or Google and get the name of number of who to call.  It’s actually going to take a little bit of research.  As I mentioned above, I would start with your local foreclosure auction, which is a great spot.

Another place to look is on Linkedin.  Find out the funds, and find some key employees, and make some calls.  You’ll likely get rejected on the first call or two.  Don’t give up!  You have to be persistent, but yes, you can find them.  A friend of mine in Florida had his father, with no experience whatsoever, start doing this and he’s already closed two deals.  You just have to stay persistent.

Most likely when you first call into the hedge fund, the “gatekeeper” will turn you away.  Stay persistent!  You need to remind them that you have a source of “off market” properties (you do, in the eyes of the hedge fund acquisitions person) that you can sell to the hedge funds at a discount.

So What’s Next?

 
I’ve give you a VERY simplified version of what to do.  I myself am not personally doing this strategy.  Instead my goals for 2013 are to focus more on finding the off market properties that I talked about in part 2 of this blog post series.  The most important thing for you, however, it to decide what is going to be your main strategy in 2013.

If you’re looking for an “easier” way to flip houses (buy at higher prices and sell at higher prices) then this strategy could certainly be for you.  If you’re like me, and rehabbing homes, you’re going to need to get better at finding “off market” deals in 2013 because the number of “deals” on the MLS is rapidly shrinking.

To start, I would check out what’s being offered at Real Estate Mogul.  I’m not only a member, but also an educator there.  You’ll get killer lessons and insights into what’s really working RIGHT NOW, in different parts of the country, from all sorts of experts.

Plus, I’ve already seen over 20 deals comes to my inbox from being a member.  This is from other members looking for joint venture partners, funding, and much more!

The opportunity to sign up is closing tonight at midnight, so I’d love to see you there inside with me.  This video presentation will tell you how to get started.

Finally, I spoke to the head honchos over at Real Estate Mogul, and below is a quick run down of exactly what you get.  I’m looking forward to seeing you inside!

==============================
The Learn Module, with over 30 powerful lessons available now
and a new lesson posted daily.  To access this module:
Log in then click “Learn” in the top menu
==============================
The Interact Module, with access to our 1000s of members
for priceless networking and real-time help with any questions
you have.  To access this module:
Log in then click “Interact” in the top menu
==============================
The Deal-Making Module to help you find buyers, sellers,
lenders, and partners on-demand.  To access this module:
Log in then click “Do Deals” in the top menu
==============================
Your very own Mogul Profile Page to act as your “virtual
business card.” Sync it up to your existing Facebook,
Twitter, and other social accounts for maximum exposure
and deal-making opportunities.  My page is located at:
http://realestatemogul.com/justinlee

To customize your page, log in then click the blue
“Complete My Profile” button.
==============================
The Daily “Mogul Insider” e-Newsletter, with one short &
sweet (but immediately actionable & highly profitable) lesson
a day delivered to your email.
Watch your inbox daily for this, and simply follow the blueprint
we lay out for you.  When there’s an action step, DO IT!
==============================
LIVE Elite Training Calls 2X/month with our expert faculty
for bleeding edge, “what’s working NOW” training and Q&A.
Your first call is THIS Wednesday!  It’s titled:

The “New Economy” Blueprint: How to Outwit Wall Street, Outsmart
Your Competition, and Profit BIG in the Next 12 Months”

Do not miss one of these live calls!
==============================
The “Real Estate Investing 101” Guide. If you’ve yet to buy
& sell a single investment property, start here! If you’re a
20-year real estate pro, use it as an entertaining refresher.
==============================
Premium Passive Cashflow Deals for turnkey rent checks.
Our “big fund” partners generate several of these deals a
month, and you’ll receive exclusive “first dibs” via email.

Most of these deals are claimed very quickly, so watch your
inbox closely.
==============================
On-Demand Deal Funding for access to hundreds of active
hard & private money lenders.

When you have a specific deal that needs funding, simply
login and post it to the “Do Deals” section and specify
“I Need Funding”

Your deal will be syndicated instantly to the entire Mogul
Lending Network.
==============================
The Mogul Publishing Program, where we send you checks
for sharing your real estate investing expertise!  For details,
login and click “Create a Lesson” on the right.
==============================
Passive Internet Cashflow to supplement your occasional
and inevitable “down months” in real estate. We send you
checks when you spread the Real Estate Mogul mission &
help grow our community.

For details, login and click “Promote for Cash” on the right.
==============================

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-Yesterday I published a blog post about the massive changes that I’m seeing in real estate investing.  You can read part 1 of the blog post here.  Today I continue with part 2-

So in yesterday’s blog post I told you about how finding good deals on the MLS is becoming more difficult than ever before, and I also shared with you how in multiple markets I’ve been focusing on, cash buyers are coming in and OVERPAYING for properties.

This means that as real estate investors, we’re going to need to do a better job of actually FINDING the deals, because the days of cherry picking deals off of the MLS (if you were lucky enough to live in a market where that existed) are quickly coming to an end.

What This Means For You & What You Should Do About It

 
I’m sure you’re aware that the lifeblood of any business are LEADS.  Without new, fresh leads coming in the door, we don’t have anyone to sell our products or services to.  In real estate investing, this means a steady supply of motivated sellers.  As I wrote in my blog post yesterday, the need to find your own, private, DIRECT motivated sellers has never been more necessary.

I read a lot people (some are “Gurus”, some are in the media, some are bloggers) saying that the banks are the real motivated sellers in the current real estate market.  Now while this might be true, just because the banks are motivated, it doesn’t mean that they’re going to sell their homes at a discount.

Why is that?  Because as we’ve indicated, there are plenty of people (some are “investors” and others include hedge funds like we discussed yesterday) overpaying for property right now.  So while the bank is motivated to sell the property, if there’s a line of people waiting to buy their assets, the good deals aren’t necessarily available to you.

So What Can A Real Estate Investor Do?

 
I have an expression which is “I like to zig when everyone else is zagging”.  I am also a firm believer that “real estate investing is a contact sport.  The more contacts you make, the better you will do”.

That means that while the “normal” or “average” investor is combing the MLS for “deals” (a practically fruitless endeavor, because some maniac will overpay for the property based on our real world experience), being a smart investor, you’ll need to head where the other investors aren’t looking.

You need to find more sources of motivated sellers.  Based on where you live, (due to market forces and the legal system), you should consider marketing to any of the following groups or sub groups of motivated sellers:

• Probates (because dead people don’t need houses, right?)
• Evictions (do you think that a landlord who just went through an eviction is motivated to sell?)
• Code Violations (what happens if your property isn’t up to code, and you don’t have the cash to do the work?  You would probably want to sell)
• Absentee and/or out of state owners (lots of people get sick & tired or managing properties from afar)
• Bankruptcy (depending on the stage of their BK, they might need to get rid of their property fast)

Now for the groups of people I’ve listed above, you’re going to need to do some sort of marketing to them.  The easiest and most efficient way is going to be via direct mail.

“But I Don’t Have Any Money For Marketing For Leads!”

 
I’m not going to lie to you: this is a tough one.  Tough because no longer can you just surf the MLS looking for deals, but rather, to make it in 2013, you’re going to have to cultivate your own leads.  So what can you do if you don’t have any extra funds to spend on direct mail?

• Partner Up (find a local investor willing to mail to those lists, but help him cultivate the lists instead.  For example, you could get the probate leads from the local county courthouse, and do the mailers, and have your partner pay for printing & postage)
• Network (instead of mailing to the probate, eviction and bankruptcy lists, start calling probate, eviction and bankruptcy attorneys to find out if their clients have real estate they need to liquidate)
• Join a community of like-minded investors (Are you in a mastermind?  If not, I would strongly consider you join something like this)
• Mine Craigslist (I really don’t like this idea, because finding deals on Craigslist is like looking for a needle in a haystack.  However, it is free, and you can find deals…just be prepared to do a LOT of looking before you even find a deal).

If any of those strategies that I’ve listed above sound scary, it’s because they require 2 things from you.  The first is to actually get up and do some hard work.  The good news about this hard work?  About 99% of your competition either isn’t smart enough, or isn’t willing to do it.  The second is that it will probably require you to step outside of your comfort zone.  You won’t be able to hide behind your computer screen and “look” for deals, but rather you’ll have to get out there and hustle.

But What Does This Have To Do With Real Estate Changing & Hedge Funds?

 
The old “We Buy Houses” business model isn’t dying, but it sure is on life support.  The reason is that you can forget about getting deals off of the MLS.  You need to market, make contacts, do some more marketing, and make some more contacts.  The days of blasting off thousands of offers on the MLS is over & dead.

The hedge funds have either come into your town, or they’re on their way, and they’re gobbling up everything in site.  This includes heading down to your local auction and outbidding you (or your bidding service) on nearly every deal, as I explained to you in part 1 of this blog post series.

So How Do I Beat The Hedge Funds? 

 
The answer is, you don’t beat ’em, you JOIN ‘EM.  That’s right.  Instead of trying to compete with the hedge funds, let them continue to overpay for deals.

So how do you join them?  Well I’m not suggesting that you go out and get a job with a hedge fund (although you certainly could).

What I am suggesting is that instead of competing with the hedge funds (which you’ll never be able to do anyway), you work with them, by SELLING your inventory of deals to them.

That’s right.  If you know the hedge funds are buying deals at near retail value, why don’t you just sell your deals to them, instead of selling to the rehabbers and fix ‘n flip guys (like me).  We like to buy at 60-70 cents on the dollar.  I’ve already found hedge funds willing to pay 99 cents on the dollar.

So How The Heck Do I Flip A Deal To A Hedge Fund?

 
It’s actually not that difficult.  However this blog post has run so long, that I’m going to write a “Part III” talking about flipping deals to hedge funds.  I’ll post that tomorrow, but in the meantime, if you’re serious about selling to hedge funds, PLEASE watch this important video presentation here.

After you watch it, keep your eyes on an email from me with part 3 of the blog post.  In the meantime, enjoy this video which will give you some extra insight.

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I’ve been a real estate investor since 2003, when I flipped my first townhome in Woodbridge, VA (Washington DC suburb) and made $27,000 on the deal.

Since then I’ve successfully invested and done real estate deals in VA, DC, MD, PA, OK, CA, WA and AZ, plus in Canada and Panama.

I’ve invested in big cities and small towns, on the east coast and the west coast, and I’ve invested during hot markets (’03-’06) and declining/cold markets (’07-’09).

I tell you this not to brag, but to let you know that I have plenty of real world experience when it comes to what is going on with real estate investing.  Because my partner and I are actually active investors with our feet on the ground, nose to the grindstone, and paying attention to what is happening in the marketplace, we see in real time what is going on.

Now what I’m about to share with you is important, but I also want you to understand that what I’m about to share with you is information based on just 2 markets: Southern California (specifically San Diego) and Phoenix, Arizona.

If you don’t live in those areas, or you’re not investing in those areas, I still want you to read every single word of this blog post, because eventually (maybe not today, tomorrow, next week or next month) this will pertain to you.  So if you can be ahead of the curve, I’m going to save you a lot of pain, agony & frustration.

So What Exactly Is Going On & What Is “Changing”?

 
Personally, I’ve never really lived or invested in a market where it was “easy” to find “deals” on the MLS.  That’s not to say that I didn’t, or that it couldn’t be done, it was just never “easy”.  I’m sure you’ve heard of these markets where you can just comb the MLS, find a great a deal, and flip it, right?

Sadly (and I say this with some envy) it was never this easy for me.  I had to go to alternate places to find the deals.  In other words, I had to rely on networking and most importantly, direct response marketing (direct mail, the internet, bandit signs, my websites, etc) to get deals directly from sellers.

In 2011 I was in San Diego investing, and deals were becoming harder and harder to come by.  There were “investors” overpaying for properties, and overpaying using “ALL CASH.”  We would actually see these investors putting these deals back on the market.  Many times we’d “work backwards” and find out how much they had paid for a particular property.  We were FLOORED when we saw how much they paid for the property!  “How can anyone make any money buying at those prices levels?” we said to ourselves.

We chalked it up to it being a bunch of “investors” who didn’t know what they were doing…and decided that with San Diego becoming so competitive, and having a bunch of private lenders with cash ready to invest being stuck on the sidelines (I know, great problem to have), we would look somewhere else outside of San Diego to try and do more deals.

My partner and I decided that we were going to look to expand to another market, and selected Phoenix based on its good job market, rock bottom prices, and inventory of alleged “deals” on the MLS.

We Were In For A Rude Awakening!

 
But boy were we shocked when we started writing offers on houses in Phoenix: we found that every single property on the MLS were getting multiple offers and bid up to levels where either there was no way to make a profit, or at least to levels where only a “buy and hold” investor (and not a flipper) could make any money.

After spending the 2nd half of 2011 banging our heads against the wall (and doing 1 single flip deals where we NETTED about $7k, $3500 each), we decided to look at the foreclosure auctions.  The realtor we were working with (who shall remain nameless because he sucks) suggested that we look into the auctions, because “that’s where all of the deals were.”

So we got hooked up with Posted Properties in Phoenix, a foreclosure bidding service.  (SIDE NOTE: Posted Properties is an awesome service!  They are super tech friendly, and “on the ball” when it comes to the daily auctions in Maricopa County, AZ).

But after spending 2.5 months of looking at the DAILY auction lists, researching the comps, looking at photos, making educated bids, we still hadn’t purchased a SINGLE property.

Not one!

Eventually we started tracking what the winning bids were going for…

You see we knew that Phoenix was more competitive, and we couldn’t buy at our targeted 70% of ARV minus cost of repairs.  Heck, we couldn’t even buy at 80% of ARV minus cost of repairs.  But what was really scary is that we found out what the winning bids were going for.

Not 90 or even 95 cents on the dollar, but houses at the auction (many of which the buyers hadn’t even been inside of done an inspection on) were selling for 97, 98 and even 99 cents on the dollar!

This was insanity!

Who would pay so much for a single property?

I had no clue, and was scratching my head trying to figure it out, so I started asking around.  I asked property managers, my contact at Posted Properties, other realtors, title insurance reps and escrow officers.

The word soon began leaking out:

• “It’s the hedge funds”
• “Hedge funds have come into town and are gobbling up properties like Pac Man”
• “Hedge funds are loving the housing prices and yields that they generate”

But none of this made sense to me.  Why on earth would a hedge fund pay top dollar for a single unit of residential real estate?  I know that hedge funds had been active in the past, buying up bulk REOs and packages of 200+ houses, and were flipping those for a profit.

But why would a hedge fund buy a single family home?  And even if they were going to buy a sole, individual property, why on earth would they pay full market value for it?

It didn’t add up, so I started doing some digging myself, and asking some of my friends and colleagues in the investment community about this.  I got some really good information, and so can you, by watching this.

And while hedge funds coming into your city (don’t worry, they’ll arrive sooner rather than later if they’re not already there) might sound scary, I want to share with you a strategy for how you can work with them, instead of against them.  It’s a classic case of “if you can’t beat ’em, join ’em.”

This blog post has already run too long, so what I’m going to do is share with you this strategy of how you can work with them in part 2 of this post.  While you’re waiting for part 2 to be published, I suggest that you watch this video.

In the meantime, I’d love to hear your comments below.  Are you seeing the same thing in your local market, or has it not arrived yet?  Any questions or comments can be posted below.

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Over the past few days I’ve sent you some emails about a friend of mine, Matt Andrews, who uses the internet to find his buyer and seller leads online.

The best part about what he does is that using the internet to generate leads allows him and his wife Lindsy to travel the world.  In fact, here’s a video we shot together in Bocas Del Toro, Panama in June of this year.  At the time, my family and I were living in Panama for the summer, while still doing deals back in the USA.  Matt spent 7 weeks backpacking Central America, and we hooked up and recorded this video:

www.REIMarketingTips.com/tycoon is the website where Matt is giving away his very best secrets on how to travel the world and still be able to flip deals.  Watch this important video where Matt actually reveals his 2 favorite websites for finding leads, and which site he definitely stays from.  Enjoy!

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