Busting Blight for Profit & Fame

Is it possible to make money off real estate while being socially responsible?

We all know about the housing crisis and what it’s doing to home values in Metro Detroit.

As a result, the number of vacant foreclosed properties is growing and blight is spreading. Traditional blue collar areas have been hit especially hard as manufacturing jobs decline. Drive down any street in one of the cities that border Detroit and you’ll see vacant properties in disrepair.

The city of Detroit is the biggest mess of all, but seems to have several parties working to stem the effects of foreclosure blight. We met one of them at last month’s meeting called Peace Tree.

I now introduce to you another, Urban Detroit Wholesalers – as featured in Sunday’s Detroit Free Press.

What would it take for you to leave everything you know behind and start a new life in one of the worst cities in America?

If you have a hard time imagining this, spend a few minutes talking to Jeanna Kiehle at the registration table of Renegade Detroit Investors. She wasn’t mentioned in the Free Press article, but she followed her husband Jeremy Burgess to Detroit when they came here in 2007. She left family, friends and a great job behind to follow their dream.

You may have heard the story of how the Aztec conquistador Cortez, burned his boats when his army landed in Mexico in the 1500’s. He did it to make sure his troops knew they had no choice but to succeed.

Jeremy & Jeanna didn’t burn anything when they got here, but they did come with the “failure is not an option” mentality. They’ve survived several setbacks & failures, but remain upbeat and positive about their decision.

They may have found their calling when they met John George of Blight Busters. They’ve teamed up with him to turn trashed properties into cash. Now, they’re making a positive impact on the city of Detroit, while making money flipping houses.

Not only have they gotten involved with Blight Busters, but they’re also planning to organize other nonprofits and groups to improve a city that’s only been their home for two years.

If these two can come here and make this much happen in only two years, what’s your excuse?

What’s holding you back from jumping into real estate investing? The fear of failure?

If that’s the case, I suggest you either team up with Urban Detroit Wholesalers or hire them to mentor you. Don’t bother them though, if you’re afraid of hard work and success.

Drew Sygit

Drew Sygit is President of The Lending Edge and holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor. He’s spoken for HUD, has written numerous articles and is a mortgage industry advocate for loan originator licensing and consumer education. He can be reached at 248-356-3739, dsygit at TheLendingEdge.com or read his blog: Drew’s Mortgage News

[tags]detroit,free press,blight busters,non-profit,success,real estate[/tags]

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When I became a Renegade

I have always known that something wasn’t right about what I was learning in school and even much of what my parents were teaching me financially. I studied and worked hard to learn it anyway and was diligent like a good boy should. All the while I knew it wasn’t right. I didn’t know what wasn’t right; kind of like Neo in the movie, The Matrix.

Some of you may laugh at the comparison and I know that many of you know exactly how I feel and can identify with the feeling. This didn’t stop me from doing exactly what I was taught to do and doing it well! I got all A’s, I worked really long and hard hours, and even enrolled in college at one point. I did all of this in an effort to be financially free and independent. Of course it didn’t work.

In the mean time I met my wife Jeanna and the thought of financial independence started to become an obsession. Luckily for me, my best friend Jason found an answer, real estate investing. While in Iraq Jason read some books on real estate investing and getting out of the rat race. He came back fired up about investing in real estate and his enthusiasm infected me as well. That was the exact moment I became a Renegade.

That was a little over 4 years ago and it seems like a life time. I have learned so much and an entire new world with different rules has been opened up to me. Rules that make sense, build wealth, and feel right; these are the rules that make me a Renegade. As a Renegade I also understand that building wealth is a long term strategy and not a get rich quick scheme. I was brainwashed for 25 years before I decided to head down the Renegade path and I have no regrets. Most importantly, I have learned to have patience with myself as I continue to unlearn years of bad programming.

For those of you wondering if you have the Renegade mentality, let me be specific. A Renegade Detroit Investor doesn’t care if the economy is good or bad, he just makes money. A Renegade doesn’t trust the government with his health, retirement, or progress; to hell with social security. Last but not least, a Renegade Detroit Investor immediately distrusts what the majority sees as safe and practical and knows instinctively that the opposite is most likely true.

For those of you who feel the same, you are not alone. Come join 50 Renegade Detroit Investors at our next meeting. The path to being a Renegade Detroit Investor is a path that starts scary and ends up feeling like you are walking home.

Make your life uncomfortable,
Jeremy Burgess
The Detroit Market Expert

Metro-Detroit Real Estate Business Group
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[tags]renegade, real, estate, independent, financial, free[/tags]

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Identifying Opportunity in Times of “Crisis”

“When written in Chinese, the word ‘crisis’ is composed of two characters – one represents danger, and the other represents opportunity.”

Now I’m not fluent in written or spoken Chinese so I have no idea if this is correct or not but it makes a very good point. Throughout Michigan in the past couple of years, even more so in Southeast Michigan, I have heard newspapers, workers, and everyone else state that our economy is in some form of a crisis or another. I’m not arguing the fact that we have significant challenges with our economy and the real estate market right now. What I’m arguing is where our focus should be.

Whether we have an auto industry “crisis”, housing “crisis” or any other sort of “crisis” there are two ways to look at it. While keeping the challenges with any situation in mind, I always choose to focus on the opportunity. We don’t face “problems” throughout our day, during the week or even with our economy, we face “challenges”. When we have challenges, we will analyze and overcome them to see an opportunity or more importantly, create an opportunity. When we see problems, our brain stops working and we all get in a slump.

There is tremendous opportunity for all of us if we just open our eyes and see it. If you can’t see an opportunity, create one for yourself! We’ll get nowhere if we just sit around and wait for something to happen, wait for an opportunity to come around or wait for a deal to fall in our laps. Don’t be the person that looks back 5 years from now and tells all their friends about the opportunities they missed and how they could have bought that business for pennies or they could have bought that house for a tenth of what it’s currently selling for.

There are more opportunities in Metro-Detroit right now for entrepreneurs and real estate investors then there has ever been. You just have to know that there are opportunities and there are challenges to overcome in seizing those opportunities. We can act scared and timid in real estate and business right now or we can be bold, realize our challenges for what they are (something to overcome), and take advantage of all of the opportunities before us.

Entrepreneurs don’t focus on the danger, they focus on the opportunity.

Be a Renegade,
Jared Pomranky
Renegade Detroit Investors
Metro-Detroit Real Estate Group – Renegade Detroit Investors main site
Metro-Detroit Real Estate Blog – Renegade Detroit Investors Blog
Detroit Real Estate Deals – Deals and market info
Free report on Detroit Real Estate Investing – Investment Secrets

[tags]michigan,economy,market,opportunity,mindset,crisis[/tags]

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The Real Estate Race is On

Real estate investors are getting spoiled with all the great deals currently available in the market.

Foreclosures and short sales have been driving inventory up, while home buyer demand has been down.

How much longer can it last?

A recent report from the National Association of Realtors (NAR) showed home prices falling from a year earlier by the biggest margin in over 40 years.
US sales price of existing homes

The same report also showed that the Pending Home Sales Index, based on contracts signed in December, surged 6.3 percent to 87.7 in December, the first increase since August.
US Pending Home Sales Index

So, home selling prices are down and sales are up. Is that any surprise?

Real estate investors aren’t the only ones looking for deals in this market!

One might be tempted to believe that best buying opportunity of real estate in our lifetime is over.

Not so fast. Did anyone follow the news back in November that FNMA and FHLMC were suspending foreclosures? How about their announcement they were extending the suspension to the end of January, 2009?

FNMA & FHLMC did this to give homeowners more time to work out loan modifications and stay in their homes and to also score political points by not evicting people over the Holidays.

The result though, is a backlog in foreclosures and a coming final surge in REO’s hitting the market. The increase in demand for housing will be overrun by this surge in supply and housing values will drop further and hit bottom.

Of further note, Wayne County Sheriff Warren Evans announced Monday, February 2nd that he would indefinitely halt foreclosures. This too, will contribute to the backlog.

What’s all this data mean? The housing market hasn’t hit bottom yet, but appears to be getting close. Rising home sales will soon put a floor under housing values as consumers grab deals on homes. The coming surge in REO’s this summer will probably be the best buying opportunity of our lifetime. Once the market hits bottom, it’ll stay there until there’s an increase in jobs.

Investors need to get out there and buy, buy, buy before the rebound! These are times when millionaires and fortunes are made, but remember – it’s almost impossible to time the market. Soon after the market hits bottom, the excess inventory will be absorbed and prices will go up. Then the question will be, when do investors sell their inventory and cash in?

Drew Sygit

Drew Sygit is President of The Lending Edge and holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor. He’s spoken for HUD, has written numerous articles and is a mortgage industry advocate for loan originator licensing and consumer education. He can be reached at 248-356-3739, The Lending Edge or read his blog at Drew’s Mortgage News.
[tags]real estate,market,bottom,inventory,nar,reo,fnma,investors[/tags]

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Timing the Real Estate Market

I hear investors and would be investors talk all the time about timing the market. Now relatively few of them actually say “timing the market” (because most people know that it’s very challenging to do) but their description of what they’re trying to do is just that. They talk about waiting for the bottom so they can buy at the lowest price possible or they talk about waiting a little longer to get it just a little cheaper. These investors usually describe themselves as “looking” for a good deal or the right time to buy but they are really just suffering from analysis paralysis (spending all their time analyzing deals or the market and never taking action).

Let me tell you why trying to time the market or the thinking that you should way to buy at the bottom is flawed. Let’s just say, for example, that real estate prices are going to drop another 10% and that represents the bottom of the market. We have Investor #1 that is currently investing and doesn’t subscribe to trying to time the market. They will buy good deals now and buy good deals later. Investor #2 is someone that subscribes to waiting for the bottom of the market to buy.

You have investor #1 that bought a house right now at $40,000 (appraisal at $80,000) and got it rented out, he bought another house when prices were 5% lower at $38,000 (appraisal at $76,000), and he bought a third house at the bottom of the market when prices were down 10% for $36,000 (appraisal at $72,000). His net result for buying houses now and buying in the future when the market bottoms out is 3 houses that he paid $114,000 for and are valued at $216,000 (3 times $72,000). That’s $102,000 in equity plus any rental income (~$200/mo. per house) that was received during that time.

You then have investor #2 that beat the odds and was able to time the real estate market perfectly and buy exactly at the bottom of the market. Not only that but even though he hasn’t been buying houses, he had all of the systems, processes, contractors, Realtors, title agents, other professionals, and financing in place at the exact time needed to make their one move, which all goes off without a hitch. They purchase a house at the bottom of the market for $36,000 that appraises for $72,000 giving him $36,000 in equity.

Now, 10 years down the road let’s say the housing prices have increased 20% from the bottom. Who’s ahead? The investor that bought one house at the bottom or the investor that bought before the bottom and at the bottom? Well Investor #1 ends up having 3 houses that he owes $114,000 (not counting paydown) on that are now worth $259,200 giving him $145,200 in equity. Investor #2 has 1 house that he owes $36,000 that is now worth $86,400 giving him $50,400 in equity.

That leaves Investor #1 ahead by over $94,000 in equity! Not even mentioning all of the additional rental income (Close to 3 times the amount of cash flow Investor #2 received) and three times the write-offs that they will receive.

I know, I can hear you talking already. Prices are going to increase by 20% in ten years from the bottom of the market? Well, if values only increase 10% over that 10 year time frame, Investor #1 is ahead by $80,400 in equity. If prices don’t increase at all from the bottom over the next 10 years, Investor #1 is still ahead by $66,000 in equity! Plus, as mentioned above, Investor #1 will get almost three times more write offs and cash flow over that same time period. Who’s ahead now?

Whether you followed the numbers or cared to read through the analysis doesn’t really matter. The main point is that the investor that takes action now on conservative investments is always going to have the jump on the investor that tries to time the market and buy at the bottom. The investor that gains experience and assets now and in the future will have a much greater advantage by having the experience, processes, and contacts to take advantage of the market. The investor that is waiting for the bottom of the market will rarely be able to pull the trigger when they think the time is right.

Take massive amounts of focused action by working with other investors that are doing what you want to do and stop worrying about timing the market!

Be a Renegade,
Jared Pomranky
Renegade Detroit Investors

Metro-Detroit Real Estate Group
Metro-Detroit Real Estate Blog
Detroit Real Estate Investments
Detroit Cash Flow PropertiesFree Report

[tags]real estate,market,timing,action,cash flow,investments[/tags]

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