Michigan Foreclosure Report by Mark Ijlal

The cheapest guy that is willing to paint your house (or fix plumbing or do the roof) for almost nothing is cheap for 2 reasons.

1. He is dead broke, desperate, behind on his child support payments and may be about to go to jail. He has been fired or gotten into fights with the last 10 people that hired and trusted him and he has no chance in hell in ever getting hired by his previous clients. Heck he can't even give you two lousy references.

2. He is going to do everything himself. For what you are going to pay him, he cannot realistically hire anybody to help him during the project. It is going to be a one-person show.

Do you really want to bet your own $20,000 check on this guy? You can't sell the house till it is fixed, yet most real estate investors who are cautious enough to read every single line of a purchase agreement yet strangely feel compelled to act brave enough to trust THIS GUY to take them to end zone.

Remember what mom used to say when we were all young... when something sounds too good to be true, it usually is.

Turns out that mom knew more about running a business than a whole lot of folks running around with LLC's and PA's in their names right now.

If you go and learn how to cook professionally in France, one of the final exams has to do with frying an egg or making a soup. The simple stuff is the good stuff.

I am reminded of this all the time when new Michigan real estate investors ask me the best possible way to get short sale leads?

Most of them think that I am going to tell them to do some complicated direct mail thing (rent a list and mail 237 letters to them for the next 237 days) or setup multiple websites wit h catchy domain name and a 32 step email marketing to back it all up or plastering signs all over their Michigan city on Friday night so the City inspectors don't catch them till Monday morning and so on.

If you are hunting for good short sale leads - focus first on the sub-division across the street wherever you live. There are houses there. Some of them are in foreclosure. I can bet you money on that and I will win. The bigger the sub-division across the street in your Michigan City, the more houses they are going to have in foreclosure.

Make a simple flyer - we buy homes, don't let bank let a default judgment on your credit, if you are ready to move on and don't want the property anymore, we can help - go to Staples and copy it or print it yourself. You are doing small numbers probably less than 200 so it is not going to kill your printer. Hire some kids for $40 to go there and drop them off.

Repeat it 3 times, 10 days apart. You will get deals out of this, either the folks across the sub-division will call you for their own homes OR they will call you for a loved one who is in trouble. Either way the phone + email are going to buzz in your favor and that is a good thing.

Two things to remember:

1. Check the weather before you drop. You want clear weather not rain.

2. Tell the kids not to put the flyer in the mailbox. It is against the law. You can rubber band it on the mailbox or if they go in the morning - they can rubber band it on the door.

Will Smith was offered the part of Neo in The Matrix, a movie that went to become an action movie classic and also spawned two lame sequels that ended up generating $1.5 Billion worldwide. He turned the role down that ended up going to no-emotion-on-my-face-ever Keanu Reeves who clocked in $65,000,000 for his three movie paycheck.

J.K.Rowling wrote the first Harry Potter book while living in London as a welfare mom. She made up the story of a young wizard living in a dorm in a school for wizards for her children and finally ended up writing it. It was rejected by a dozen publishers before finally being accepted, published, and becoming the biggest publishing phenomena of the last 50 years, spawning 7 hit books and 6 (so far) hit movies and a dedicated theme park (launched recently to rave reviews) in Orlando. She also became the richest women in England, ahead of the Queen in a matter of a decade.

Tom Clancy wrote his first book while working full time as an insurance agent. His wife one time tossed his first manuscript (The Hunt for Red October) on the floor because she was sick of him 'wasting his time' in 'writing his stupid book that nobody will ever buy.' Clancy is well worth over $100 million right now.

Colonel Sanders pitched the idea of a Southern style fried chicken to a dozens of potential investors. They all took a pass.

Howard Schultz went door to door in Seattle (read Pour Your Heart In It, a surprisingly human book about business that he wrote about the story of Starbucks) asking for private money for his 'idea' of 'bringing Italian style espresso bars to USA'. He got rejected over and over again before a doctor said YES even before seeing his presentation because he liked him personally. That doctor's initial $100,000 investment turned into a $10,000,000 payday when Starbucks went public. (Here I just give you the biggest secret about getting private investors with ease in the above lines. Did you catch it?)

My first (and the last) employer in USA tried for years to convince anybody who would listen that cell phones were the future and a national chain for dedicated high end cell phones would make sense. Almost everybody, even his close friends privately thought he was delusional and refuse to partner / invest with him. He ended up building his chain close to doing $100 million dollars, sold his stake, saw recession batter the dumb venture capitalists who could not run it as an entrepreneur can (with agility), bought it back and in the process of rebuilding the 100 stores chain (all done in less than seven years) back up. I don't know how big he will win this time but his track record so far of proving his naysayers wrong is pretty good and I will not bet against him.

But this is not about the warm and fuzziness of success. Nah, this week lets think together for a minute about the ones that got away, like the girl that was meant to be and one day she was with somebody else.

All those people who could have ended up multi-millionaires if they said YES to Howard Schultz: how do you think they feel every time they drive by a Starbucks? I wonder if Will Smith once in a while just looks at The Matrix come up late at night on TNT and just grimaces picturing him playing Neo 100 times better than Keanu?

What about those 12 book agents who rejected Harry Potter and the Sorcerer's Stone? They would be millionaires now just by a measly 10% cut of the advances J.K Rowling ended up getting for the next six books in the Harry Potter saga once the first book was a hit. Do you think once in a while they are at a book store and pass by the shelves full of Harry Potter books and think about blowing their own heads up picturing the moment they tossed that first manuscript in the trash?

Who can they blame for what they will never have now? They are the ones who said NO to the opportunity that came to them but they missed it. That this was all given to them on a sliver platter, a moment in time that all they had to say was YES and everything in their lives could have changed for better and for some reasons they just could not see it?

What have you been given in the last five years that you ignored or said NO to and then saw that wave lift somebody else?

What is in front of you right now that you are not paying attention to which will end up making somebody else's dreams come true?

Most people are so careful in watching for potholes in the road of life and business that they miss THAT TURN which could have taken them to the place they always wanted to go.

What are you watching?

Potholes or opportunities?

You are about to buy deal #4. You have a list of REO's that you are about to go and look at. You pull over in front of a 3 bedroom brick colonial. You take a look. You know how much this house will sell for once you are done with your magic on it.

You are on the right track on mastering your Michigan City. When you do comps in your head just by looking at a house, it means that you are focusing on 1 or 2 cities at most, you are looking, evaluating, fixing and selling in a small tight circle and with every flip you complete, you know EXACTLY how the finished house would go for.

Your buyer list will also grow fast this way. One of my coaching group members Doug Benson keeps a good record of every single person who has visited their OPEN HOUSES in the past. Doug and Debbie flip houses in Lansing, Mason, Holt area over and over again. If a buyer does not falls in love with house they did in June (may be needed a bigger backyard?), a good probability is that they might like the house they finished rehabbing in August. You would want to go through some of the FiredUP show episodes featuring Doug because you will learn a lot from him about selling homes.

People don't buy a house then a city to go with it in Michigan.

Look at the way you bought the house in which you live in right now. A discussion took place and you and your significant other, the choices were whittled down to 1 to 3 cities and then the search for the home started.

So what made you pick the city you live in right now?

May be it was the school district (huge checkmark) or may be it was proximity to work or family. But you choose the city first then you started looking at the houses. You did not get up and said, "I am looking for a 4 bedroom house and I don't care if it is in Macomb Township or Highland Park. As long it has four bedrooms, I will take a look at it."

I don't think so.

People who want to live in Canton / Plymouth, want to live in Canton / Plymouth. They are not looking at houses in Sterling Heights. The more deals you do in small circles, the better your chances become that your first flip will get you the buyers who will buy your next 3 homes also.

Master one Michigan City. Know the houses. Know the area. Your business of selling these houses will become easier and easier with every flip you do. Avoid the temptation of being a grasshopper with your flips.

I have couple of friends who own restaurants in Metro Detroit. Almost all of them have seen their business go down in the recent years. Sit down with them over a glass of wine and after 30 minutes you are guaranteed to hear tales of disgust with the economy, the auto industry even Obama.

On the surface, it seems obvious. Restaurants in metro Detroit are hurting because people are spending less on going out.

I don't think that tells the whole story. I think their business is down because chain restaurants (Applebee's, Olive Garden's of the world) are simply very much better at putting their restaurant in front of hungry customers. I keep seeing chain restaurants open new locations. Pick up a copy of Entrepreneur magazine and glance through the franchise section. They are growing.

So easy to blame the economy, much harder to admit that you are being beaten in your game by a better player. All of my friends don't do anything to put their restaurants in front of hungry people who are looking to go out tonight with their families, friends or dates.

The most important words in the above paragraph: hungry and looking.

No website. No online advertising. Unless you are driving and end up glancing at their front sign, you will never know that they exist. A common sentence heard all the time from people walking in: "Hey I live only 5 minutes away from here and never knew that your restaurant was here till today."

O.K. I understand that a mom and pop place cannot compete with Olive Garden but they can spend $10 per day on online marketing. It cost a lot more than $10 to start a restaurant.

Heck even $1 invested to put your real estate investing business in front of people who might become your private investors (hungry) or somebody you will end up selling (looking) a home to whether wholesale or retail is better than zero.

A medium size cup of coffee at Starbucks is $1.87. Two donuts at Dunkin cost $1.50. But for a $1 per day, you can put your real estate investing business in front of 5,000 people every day. Think of it as renting a billboard which is being shown ONLY to a perfect group of people. The only difference being is that this billboard is in your computer instead on I-75 or I-696.

Just starting out and even $1 per looks tough? Look in your basement and your garage. You have stuff lying around there that you have not used for years. Sell them on eBay and Craig's List. I bet you will get more than $30.

The first time I ran an ad in Detroit News for $120 for a Sunday Classified looking for deal partners + private investors, I was pretty nervous, but I kept my mouth shut and did it anyway. I would put them on my credit card, every week, week after week, and pay them off with every wholesale deal that was going down. I never looked at it as 'spending money' but rather investing in my business. Two words but with a very different outcome.

Even in a slow month like December where everybody is thinking shopping or at the beginning of summer where everybody in Michigan is outside instead of in front of their computers, I never stopped 'investing' in my business.

I knew in my bone marrow that being 'invisible' was not the way a business can survive let alone grow. Microsoft, McDonalds, Burger King, Art Van, Best Buy, Ford... we all know what they make and sell yet they all spend billions 'reminding' us that they are here, what they make and sell and YES, THEY ARE OPEN FOR BUSINESS.

Flip on the OPEN SIGN in your business. You have no idea how many people are looking for you right now in your Michigan City. Be found. Invest the $1 and your business checking account will write you a very big check with your name on it very soon in return.

You are a week away from finishing rehab on your latest flip. The ugly house is looking gorgeous. You are in a good mood. Your plan is to get the work finished and push the button on couple of things you know will help you make the house sell fast.

STOP!

You need to start right now. You need to start on all of them at once, not line by line. Meaning you will not first order a sign, put the sign up in front of the house, wait for couple of weeks, then find a flat fee MSL service, then make a Postlets listing for Craigs List....

That is not the way this dish is cooked.

Ever watched grandmother cooked? She just put up three four pots up and started tossing things in. You may have thought that there is no way this food is coming out O.K. yet it was one of the greatest meal you ever had in your life, over and over again every time she cooked.

You got to start doing the 'selling' before the house is finished, no matter which Michigan City you are fixing this house up. Everything takes time. What looks like a minute, takes an hour. What you think will take an hour, will take a day.

A road sign will not be done and delivered to you in one hour. At best, 2-3 days. If you wait till the house is finished, then figure the payment out, and get it ordered, count the weekend days in it and you just wasted 4-5 days from idea to reality.

Somebody referred you to a great flat free MLS service? You left a message but then you had to leave town on a family wedding and they called back but you don't have a good outside picture of the house so you have to wait till you come back on Tuesday and by the time it is done the whole week is passed.

Look at the rehab that you are about to wrap up... did everything really finished EXACTLY on the hour that you planned?

Get your list moving now while the house is 7-10 day away from being perfect. Get the outside done first so you can take some pictures. Good thing about online marketing - it only takes minutes to add more pictures as other rooms in the house get wrapped up.

But start thinking 'flipping' and not rehabbing now.

It is time.

One of the big startup challenges if you are just starting out in Michigan real estate investing is: where to go and find good reliable contractors who will give you good prices (not the cheapest) and finish the job on the deadline they promised (most important).

Instead of taking chances with relatives and friends (bad idea) or finding some cheap I-know-how-to-fix-everything type character (worst idea ever), next time when you are at a real estate investor networking meeting and somebody gets up and tells their recent success story about a flip they just did, get their business card and take them out for a cup of coffee next week.

Ask them for references to good contractors they have found recently with whom they are happy with. Repeat it 3-4 times with different investors and you will end up with a very good list of contractors who have proven already that they can finish your rehab pretty fast too.

You are not looking for soul mates. So no profile on eHarmony required or a needless search for years to find the perfect electrician or plumber. The other investors who are just one deal ahead of you have already done it for you so why waste time in speed dating contractors? Get the list and get your house finished quickly.