|
Article of the Month for December 2001
|
Foreclosure Mentoring
Question:
Where can I find the best mentor or mentoring program for my area (Houston, TX) that will help me be succesful choosing and profiting from foreclosures? And is
following a mentor's advice the best way to go for Lease Purchase or any other form of real estate investing?
John B.
=============================
Reply:
John, in the beginning of my foreclosure career (1982) I looked all around the San Diego area for a foreclosure mentor. And time after time I was disappointed in my
quest. At first I thought they must work for title companies, but no, there weren't any foreclosure gurus there. Then I turned to local trustees processing foreclosures
and no luck there either. And every time a traveling "expert" came to town with their foreclosure junket I would be at their teaser seminar. You know, the preview
show that was supposed to be so illuminating that I would jump at the chance to sign up for the huckster's Saturday/Sunday end-all special. Trouble was that I didn't
find their previews persuasive enough to motivate me to want to ante up $250+ for more of the same generic nonsense they were peddling all over the country.
The only people around that really "knew" this business were a handful of active foreclosure buyers who weren't about to tell anyone anything about the business, no
matter what you were willing to offer. At the time I didn't know how to ferret out the retired foreclosure experts.
So I came to the conclusion I would have to become my own mentor. I decided to read all of our state codes governing California's foreclosure procedure a couple
of times. I also decided to go to the trustee's sales and just watch for six months. In addition I spent hours daily at our county recorder's office, teaching myself how
to use their records frontwards and backwards. For subject material I reverse engineered every property that was bought by our local pro's during those first six
months. I would also do the same on the occassional properties I thought were great, but no one bid on. I soon learned that a good foreclosure investment had to
have more than location or a nice appearance going for it.
I decided that I would have to go out and look at all of my competitors' foreclosure buys too and practice trying to come up with their current fair market value by
comparing them with comparable properties that had recently sold. So I subscribed to an appraisal service that provided me with current appraisals done in this
county on a monthly basis and is indexed by our local map coordinates.
It wasn't too long before I knew a lot about my closed-mouth competitors. From the recorder's record I knew who did their title work and who they used for
refinancing. I learned how they carried back financing themselves. And if they had to foreclose themselves, who they chose to act as their foreclosing trustee. I also
knew when they made obvious mistakes and lost money as a consequence.
I plotted out exactly the areas where each one bought property and how much they bid for it. I soon appreciated that they had definite preferences for certain areas
and type of property, and as a consequence, when they would tend to bid more or less avidly. I even kept track of how high each one bid on every foreclosure sale
before dropping out of the bidding. Of course I went back to the recorder's records to research each of their properties time and again until I found the deed where
they had resold the property. Working with the transfer tax declaration found on those resale deeds I learned the price they resold the property for and thus how
much gross profit they'd made, or in some instances, what they must have lost.
I began making an ever-expanding foreclosure workbook that started with our California foreclosure codes and then went into what I call "The Terrible R's of
Foreclosure". Those are items related to: Raising cash, Researching title, Receiving possession, Rehabbing, Refinancing techniques and Reselling for maximum sales
price. As time went by I added sections pertaining to Buying Before the Sale, Buying At the Sale and Buying After the Sale. Years later, as I perfected the
techniques of doing Jr. Bene Buyouts and providing a Search Service I added those components too.
After six months of such effort I felt confident enough to begin buying at the trustee's sale on my own account and now, 19 years later and more than 200 properties
later, I'm still at it.
Oddly enough, after four years in the business I was pestered by a fellow so much that I finally gave in and trained and mentored him in foreclosures. I enjoyed the
process so much that I continue to do it, as a sideline, to this day. And I'm proud to say that my first student is now so successful that he now buys as many
foreclosures in one year as I have bought in 19 years!!
Hope this tale helps.
|
