2012 Year in Review, the GOOD, the BAD, the NEW ME!!!

2012 was a roller coast ride. I joined the success academy in November 2011. At that time I was in Anchorage, AK turning wrenches as an automotive mechanic. Now I invest full time and the long hours of busting my knuckles and slaving away building someone else's wealth are long gone. My family and I now prosper 100% from my labors. We also help our local economy as a bi-product of my real estate success. I wanted to use this forum to share my failures and successes.

When I joined the success academy I was trying to invest in the Anchorage, AK market and the Kansas City, MO market. I was shooting myself in the foot doing so, because I was dividing my time between the two markets, not giving either one 100%, rather 50/50. I hadn't developed a system yet to allow me to juggle two markets. I think someone could do very well in Anchorage, even though the market has been stable and hasn't seen the distressed home owners like much of the Lower 48 (as we call it). I never saw bandit signs or other creative marketing pieces out there. As an early investor, many of my leads were MLS driven. I put an offer on a short sale, and spend way too much time on that. I went through a handful of realtors who didn't get what I was trying to do.

In April I was blessed to co-win an essay contest hosted by Tammy Reoch on this site. I won a ticket to the Gain the Edge event with Dean himself along with an All-Star cast of top investors. This event was like steroids for my investing career. Here I was sitting next to Dean's top students, exchanging cards, building relationships. It was amazing how open and friendly everyone was. Being surrounded by success helped me elevate my confidence. Before I went to the EDGE,I hadn't done one deal. One month and one week later, deal number one done, in Kansas City, while I was in Anchorage, $5,000 in my pocket.

At the EDGE event, Ali spoke about analyzing your business and stop doing the things that are not working for you. Investing in two markets was not working for me. I made a choice. I chose Kansas City. I relied heavily on Craigslist in the beginning. It is easily accessible and I could email people at any time. As I started to get in the groove, I started waking up at 5am, before my family woke up, to give me some time to work on the business before having to go to my mechanic j.o.b. Anchorage is 3 hours earlier than Kansas City, so this move helped me take advantage of the time difference. At 5am it was 8am in KC, so I could contact businesses then, property managers, title companies, etc. At 6am I could start calling individuals. I got a lot accomplished during those early morning sessions. Being a mechanic also worked to my advantage because I was able to answer my phone throughout the day, all while being in the back shop, hands greasy. I kept a notebook in my toolbox and when the phone rang...I ANSWERED IT!!! I was also fortunate enough to have an understanding manager. He knew that I had aspirations to do something bigger. I kept him updated on my real estate success and he calls me from time to time from Anchorage asking me investing questions. I think he may have caught the REI bug. Also, the owner of the mechanic shop is a landlord, so I was able to pick his brain about local real estate issues and just get a picture of the REI/entrepreneur mindset. They both wished me success when I gave my two week notice and told them I was going into RE full time. That was three months and $20,000 after my first deal. I don't recommend quitting your job before you get very established in this roller coast ride called REI, but I knew that I found my passion, and I wanted to dedicate as much time to it as possible.

My deals:
My first deal was on found on CL. You can read about that one here:
http://www.deangraziosi.com/blog-post/chadbartlett/my-first-deal-doneim-...

My second deal was also found on CL, kind of. I saw an ad from an investor selling bulk properties. I called him and told him I was looking for deals in the KC metro. He sent over a list of properties that he had. I had a partner on the ground (met at the EDGE) look at about 10 of them and I made an offer on several. We came to terms on one unit, a two bedroom house in KC for $2,000. A starter home in a lower income area on Anchorage would cost $150,000 minimum, and need a ton of work. $2k? No wonder people invest so heavily in KC. So, I assigned that home for $4k and split it with my partner in KC. It's important to build relationships always, but especially when investing remotely. You need someone to be your eyes and ears, and hands on the ground. Maybe that's a realtor, or property manager, but make partnerships.

Deal three my eyes and ears in KC asked me to find a buyer for her latest rental rehab project. I had a buyer contact me about it by chance, and we worked out all the details. I put $1,000 finder's fee in my pocket. Dean says we create our own luck!

My fourth deal was also from CL, kind of. I saw an ad from someone looking to sell a turnkey rental. I assumed the ad to be from an investor. The price was higher than what my buyer's needed to be at, so I wrote an email. It said something like: Hello, I saw your ad on CL. I am investor in KC and am looking for more properties. The property you have at XXXX is more than what I finding them for, but if you have any other properties for sale, please let me know. Something to that effect. I am sure that many investors saw that post and moved on to the next one because the price was too much. I live my the rule "it doesn't hurt to ask" and many times in REI I am surprised what people say yes to. How many opportunities are missed because you just didn't ask? SO, the woman emailed me back and said that she had two other houses she was considering selling, but hadn't listed them. She told me that she was a CA investor looking to get out of the KC market because of bad experiences she was having with her property managers. She said that she had flexibility on the prices on all three units and asked me to make her an offer. All three were occupied and cash flowing. I ran the numbers, rather, I ran my buyer's numbers and made her two offers. The first offer was for her to seller finance the properties to be, I'd make payments to her and keep the rentals. She didn't like that option because she just wanted to be 100% done with the properties. Then I told her where my numbers would need to be for a cash offer, pending my partners' inspections. She said okay. I ran the numbers by one of my buyers, and she was interested. We put a package deal together and she acquired three cash flowing turnkeys (averaging about 20% CAP), the seller got rid of her headache, and I put $10,000 in my pocket for assigning the contract. Remember, it doesn't hurt to ask.

Deal number 5 was found because of an ad I put on CL. A motivated seller contacted me because of a WE BUY HOUSES post. He needed to move out of state quick. My partner looked at the property, negotiated the price, found a buyer, and we split the $2,000 assignment fee.

Deal number six was found by utilizing the 25-1 strategy. I found a decent realtor (which was and is one of the hardest tasks for me)and I started blasting the MLS. I negotiated an REO from the listing price of $109,000 down to $72,300. Banks can be motivated sellers too!!! I then contacted my buyers and they walked through the house. Nobody was really jumping at it, so towards the end of my inspection period I contacted one of my buyers. I asked him about the property. We talked price and I was very honest with him. I said, look, I have this under contract and I just want to get it off of my books, you can have it for $1,000 assignment fee. $73,300 for a home with and ARV of $145k and $15k in repairs. He walked through the home again and said yes. (Follow-up and flexibility) This one was tricky because it was and REO so it couldn't be assigned. I was going to add my buyer's name to the sales agreement and then at closing remove my name for the $1k assignment. The bank said that they didn't want to do that. I couldn't double close because my buyer was adamant about using his title company and they don't do dry double closes. A wet double close wouldn't work because transactional funding would be more than my $1k assignment fee. SO, I asked the buyer to fund the deal in my name, and then at closing I deed the property to my buyer. He said yes and that is what we did. If anything, stay flexible, stay creative, and keep the coaching staff on speed dial! I did this deal while I was traveling from AK to KC on our three week driving expedition. My wife and I decided to move to Kansas City. All of the above deals were done while working full time and being in a different state, 3,500 miles away. I never set foot inside any of these homes.

For deal seven I was in Kansas City and still using the 25-1 strategy. I received a counter offer from what I later found out was a probate. I can't remember the exact numbers, but I got it for about $30k off of list price and assigned it for $3,000.

Deal number eight. Bandit signs!!! Got a call from a motivated landlord looking to get out of the game. He had a duplex that was vacant and needed about $2-3K to get it rent ready. I didn't really have buyers for that property but I looked at it anyways. I liked it and wanted it. So I asked him, can I take over payments? We talked about the details and finally he said okay. His payments are $404.45 per month piti!!! Remaining balance $30k with the final payment in 5 years. Estimated rent for one side is $550!!! Cash flow! So we closed on this property via subject to. I have a crew working on the duplex right now and will be rent ready by the end of this week! Remember, doesn't hurt to ask!

Deal nine was from the 25-1. I locked up a Fannie Mae REO for $20,800 and assigned it for $23,800. This one was tricky too, but I went back to the formula for success that I used for my first REO and asked the buyer to fund the deal in my name and then deed it to him at closing. That's what we did.

This is part of the bad, this was the deal that almost was, but took up more time than any other deal. It was a subject to that I put under contract and then for someone to do a contract for deed on the backside. I was set to put $5k in my pocket up front, earn $300 cash flow each month, and then put $25k in my pocket after 2-5 years. You can read about that here:
http://www.deangraziosi.com/real-estate-forums/my-deals/131813/uniformed...
I learned a lot from that experience and I'm on to the next one.

Deal ten was from a bandit sign. Motivated seller had a home that she needed to sell from when her father passed. She had it vacant for a year or so and got tired of paying taxes on it, so decided to sell. I put it under contract and assigned it for $5,000. Not too shabby. Love Bandit signs!!!

Deal eleven was a turnkey rental that I added to my portfolio. I built a relationship with my buyer from deal number nine. He invited me to his Christmas party and we talked real estate, of course. In conversation I told him that when I add properties to my portfolio it is typically via subject to or owner finance. He said, well I have a property to I would owner finance to you that is turnkey already rented section 8. I liked the area, we negotiated the terms, and them we went to look at it. I liked it and now it's mine. No money down, I use the tenant's rent to pay the seller each month, and the first month of January is free, so I get to keep 100% of January's rent. Plus the selling price is about 70% ARV, so I can refinance and get a lower interest rate. I LOVE REI!!!

The time frame for the above is: My first deal was completed June 7th, 2012. My eleventh deal was done December 31, 2012. What a great year!!! Today is January 3rd and I already have 5 properties under contract this year, with one set to close tomorrow as another one of my rentals. I will keep everyone updated on 2013 in a separate blog.

If you never take action, you miss so many opportunities. Believe in your dreams, you deserve it. Make this the year you live your vision!