Las Vegas - REO & Foreclosure Super-Store!
This question is primarely for John Locke:
Hay John,
I happened to see the foreclosures listings from Las Vegas the other day and there was exactly 976 homes that went in REO in the LAST 15 days alone. That's 976 houses that went through 3 months process and end up on trustee sale where NO ONE was there to buy them on the spot.
Question:
----To the best of my knowledge, you have to have 100% of the biding amount in cash or on the cashier check (payable to yourself), to be able to bid and win the particular house? Am I right? -------
Knowing that in LA the investors curenty pay up to 90%-95% of the property's retail value on auctions, I wonder why there is no more local investors buying NTS houses in Las Vegas and why there is no more profesional investors form CA around, when that market is only 300MI away (from LA). Can you please let me know where/what is the catch?
In my opinion, among probablw 200 houses a month. there must be few excelent deals, which may allow you to score big in one relatively... medium size town. With that in mind and based on the fact that you sad you made over 500 sales, I suppose you made your money so I wonder why wouldn't someone like you borrow a ton of money or form a REIT and buy at list a 3-5 and even more houses a month for cash to make a $50K a pop, instead of several thousands on a waiter subject 2 deal? Where is the catch?
The reason I am addressing this post to you is obviously because you are the RE guru form Nevada. And the chances are that you are where the money is and that's Vegas - in deed and trust.
Thanks!
omega1
[ Edited by omega1 on Date 12/18/2003 ]
[ Edited by omega1 on Date 12/18/2003 ][ Edited by omega1 on Date 12/18/2003 ]
I can't speak for JL Yes, he is the LV guru with a sterling reputation. I understand he's currently in Florida.
The auctions at the steps of the courthouse are for all cash -immediately at the time of sale. There are a mob (I guess I shouldn't use that word) of people at the auctions (Mon-Fri). On
occasion, I'll buy one or two. Most go back to the lender. Nobody pays 90%-95% of FMV and survives for very long. The reason they go back to the lender is because there's not enough equity-not because there aren't enough bidders. Sometimes a "sweet deal" falls through the cracks-but it doesn't happen on a regular basis.
omega1,
Glad to meet you.
I along with Sammy have attended the Las Vegas auctions, trying to find a deal there is slim to none. Ask anyone of these players about short sales or REO's and such they will tell you through the laughter their thoughts.
Figure with the money they have and spend they would not be standing in line at an auction if they could buy any better elsewhere.
There are about 25 serious players who attend that work the auction for all its worth. If you are a new comer then bring your lunch, because gauranteed it will get eaten by the boys. In Las Vegas we call a serious player one who has a bank account with lots of zeros and comma's.
Many years ago I learned that an investor should not look for houses, but for problems they can cure. To prove my point you see the amount of houses that have been foreclosed on. Now if a person reached these people before foreclosure offered them U-Haul money and cured their problem, then this person would be a creative real estate investor. This person would have very little money out of pocket, no loans, no credit checks, bottom line no conventional thinking.
Here is the senerio, you purchased the property for very little money and have the existing financing to use. You sell the property and make a nice profit on the downpayment from your buyer. You increase the interest rate for a passive monthly income. You sell the house in two years for another profit by adding a percentage of the increase in appreciation.
Las Vegas properties are appreciating 1% per month so you can calculate the back end of the deal when your buyer re-finances. My $500 - $1000 out of pocket to purchase the property has now turned into $25K - $50 in a two year period or less.
This is the difference between creative and convetional investing, I will stick with my Subject To method of creative investing,
I will continue to teach this method to all of those students that start out with a few comma's and zero's and who will work the Subject To method. They will have a chance to add many comma's and zeros to their bank accounts by using this method.
I have worked many markets across the US, I found that Subject To will work anywhere there are people with problems.
A student of mine asked me what I do with my money that I make from Subject To deals, apartments, commercial buildings, etc.
My simple reply was "He!! no, I just spend it."
John $Cash$ Locke
My pleasure to meet you John. Thank you too, Sammy!
I believe 100% in your talent to se a solution and I have a full respect for your RE expertise and long time success. Based on the above, what do you think the right strategy should be for me to take off in a steady fashion where using money may serve as accelerator or time saver?
Reading several of your articles and now from your response, I came to realize that there is one thing that separates you from 99% of others who just simply don't have what it takes to make successful deals. Do you want to know what's that? That's TSC (Titan Self Confidence), vision, commitment and out of the box strategic thinking along with crisp creative solution driven imagination.
Your story about ping pong balls is an extraordinary example of that fact. Your comment "Many years ago I learned that an investor should not look for houses, but for problems they can cure. " is very good observation and true for any business. In the better time when buyer was more in control, I use to say: "if there is no improvements that you can do to increase the equity in a property you want to buy, don buy it unless the price is 30-40% bellow market. However, because we don't find this deals anymore, we have to invent them. And thats what you do best. My only objection to subject2 technique is IF there is no steady stream of deals in which I can invest lets say 100K, there wouldn't be any serious cashflow taht I can use in any othe investment. Isn't that true? Also, if there is cash investors knoking on the homeowner's door and offer cash for equity, why would they take my offer that doesn't match the cash one? if the market wouldn't be so seller one, that technique would certainly be a goldmine. I practicly do not know because I never use it but i would if it can compete against the other investors cash offer.
What I also believe to be true for any business is: You solve the market pain and you'll make your money as a result of that. For example, I've been working on a new internet based technology that would streamline inventory and provide 70% saving on new inventory procurements for the entire US used automotive market. 3 years of work. The system is not ready because it requires more cash and the investors in technology are rear this days http://www.after.com implosion, but is almost there and once is lunched, it will provide the potential saving of up to or about 1 billion a year. It will also change the entire used car industry and to make it work, yu have to have your kind of quality: VSION, SELF CONFIDENCE & COMMITMENT. Because it also requires investment, I have to make extra money in RE. I have to create a steady stream of profit, so my legacy of helping an entire industry and 12 million consumers who anyway trade-in their car for less will see the light of that D-day. The question is what's the best and most profitable pathway for my precondition in RE right now? Buying and on tax default auctions and developing town homes? Fixing and flipping foreclosures in inland empire in Lancaster, Lomita or elsewhere east of LA? Buying multi family units? Rehabbing?
Buy the way, do you know, how are multi unit business doing in Vegas anyway? Can I by a good deal on larger buildings?
And because I am asking you some interesting question I would also like to let you know a bit about me, what I know and what I want so you can give me your best opinion. Why am I interested in LV trustee sale auction? (You'll, see down there that my background is in cars and I newer buy anything retail.): 1) I would like to buy a house there so when I am in LV, I do not have to stay in the hotel. Hilton always welcomes me as VIP but still, hotel is hotel. Unless you own it you can't leverage against it or expect to gain in equity. 2) I believe/d that somehow in LV, either your way of short sale way or pre-foreclosure pay-to-move-out way, something must work better then the same game in played in LA. LA "investors" are now paying just to much for anything. I do not need a tons of houses thou. maybe 3-4 a year or just to make me 100K. Commercial properties are also interesting but I do not know them well. I personally like to structure my game in the way to have pre -foreclosures or NTS flipper deals produce a short term cash flow which I can re-invest in multifamily keepers on the long run against which I can still leverage my future larger purchases. I also like town-home developments. if the deal is structured right, it can double some serious amount of money in year to year and a half time.
To understand my ability, my (main) background is in used cars John. When you next time want to buy a nice car wholesale, you call me and I'll get you whatever you want for as long is not a cheep transportation car. I don't like to deal with those <IMG SRC="images/forum/smilies/icon_smile.gif"> I was once arguably one of the top US buyer of salvage cars for years. I was buying damaged, striped, flooded and in other way distressed vehicles nationwide for 2 major salvage car dealers from South Bronx, NY. For what what was worth at that time, I would walk through the isles and isles of damaged cars and place the wining (sealed) bids on dozen of them a weak, without ever making mistake to overbid any. Fixing those damaged luxury cars is much more sophisticated process then fixing houses. I also remodeled 4-plexes, which we striped inside to 2X4's and rebuilt them to the point they looked as new. In LV, everybody seam t like new houses so maybe there could be niche on multifamily units? How about those in down town aria?
Auctions: If you ever had a chance to see how the car auctions handle 2-3,000 cars a day, you'll know that biding on houses on the court steps is practically a slow motion joke. I am definitely not experienced in that game and I know that what you don't know can hearth you, but I also know that due diligence and a good prep work, title search and comps are the key. You make a decision what you want to pay for a house and that's it. You go s bit up jus to have "players" suck it up that time, so next time they do not try to set you up. Otherwise, the way I do, I have them each buy me a lunch the next time if they manage to eat mine! If the players buy those houses at 70-80% of their value, I hope that there would be the one for me! Correct me if I am wrong but I believe that their goal is 65-705 of the value?
Well this is my story and those are my thoughts
Thanks,
Alex[ Edited by omega1 on Date 12/18/2003 ]
Alex,
Thank you for sharing your background with me. Now for another surprise, I was a Licensed Auto Dealer for many years.
Fortunately I had some serious lines of credit with Manhiems and AFC so I was able to purchase hundreds of thousands of dollars worth of vehicles through dealer auctions in California and Nevada, however this is entirely different from bidding at the court house steps on properties. If it were only this easy when bidding on properties.
Since you have expierence in this area you understand the psychology used in the bidding process at dealer auctions. I am sure you are taking this expierence and puting it to use in developing your new program.
The best way I could advise you taking in your expertise is to start networking within this great industry. You would be looking for real deals where your cash assets would come into play to swoop up the deal for cash or enough cash to make your deal make sense to the seller. I have found some of my best deals from Bird Dogs, albiet just a person who is aware of a deal or Bird Dogs who specialize in finding deals for others.
Networking would be your direction, however pick out what you believe would be the best properties to purchase for the maximum return on investment. You do this by a doing a definitative market research of your target area. What I refer to as Demographic Marketing.
Always let everyone you meet know what you are looking for even the waitress at the local diner.
John $Cash$ Locke
[ Edited by JohnLocke on Date 12/18/2003 ]