What you missed April 2008 Meeting by Robert Davis
Jeff Smith gave an excellent talk about the current real estate market, what caused the collapse, and what we might do about it. Some of the major causes: credit was too easy (why would anyone finance 125% on a property?), no Federal watchdog, risky loan rules, a huge investor push (too many speculators), and a lot of real estate fraud.
He began his talk about the fallout results and what we may do to make money in this down market situation. Prices have plummeted, buyers are very wary of buying, some investors/speculators are in panic mode, some landlords are ‘bleeding’, and there is the foreclosure scare. Jeff believes, however, that the market will remain relatively steady now until after the November elections.
What does all this mean for us? In his opinion there will be more millionaires made in the next two years than in any previous two-year period in history! Jeff said it is a perfect time for us. There are desperate buyers out there with great homes for sale. We have a buyer’s market. It doesn’t matter what the prices are if we buy right. We can buy at huge discounts in prices. We can get incredible seller terms. We can buy into 20-40% equity positions, and the quality of prospective tenants is improving. He believes this trend will continue for perhaps another two years before the market significantly changes.
Jeff gave some good tips on how to find houses that could be purchased way below market. (The best tip he gave us is usually reserved for his seminar. You had to be there to hear it!) He did say we have to get the right terms so that the house will pay for itself and give us a positive cash flow. Contrary to general opinion, with proper terms, any house can have terms that will allow it to cash flow positive. He gave us some examples of how to make a seemingly negative cash flow house become a positive cash flow investment. One example is, when using seller financing, we could offer low payments for a number of years and then a large payment or payoff. We might later offer an early payoff if they would discount what’s owed. The key to this is in negotiating the right terms for a house we intend to keep. If we want to flip a house we obviously use a different direction in our negotiating.
Finally, Jeff gave some good ideas about how to attract better tenants and buyers. His ads only give some details and the property address without a phone number. The prospective tenant or buyer must go to the house to find out how to call him. He posts the phone number to call and more details about the home on the property. This shows the tenant can find the house and since they have seen it and are calling him, they must have a reasonable interest in renting or buying it. When they call, he asks a few key questions. What is their provable income? How long have they been at their present address? How much are they currently paying? How is their credit? Depending on how they answer these questions determines if he should set up a meeting with them.
We enjoyed an informative and interesting evening with Jeff. He is a local successful real estate investor and entrepreneur, and a charter member of SREIA - joining back when it was the RAND (Robert Allen Nothing Down) club in the early 1980’s. Jeff gives excellent seminars at a very reasonable price. He can be reached at JeffSmithTrustee@Yahoo.com, or through his website Thewalkingrainmaker.com.
Past What You Missed
See past meetings schedule here