Some brief highlights of our latest Bootcamp in Michigan…..from Craig Fuhr’s perspective.

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I’ve probably gotten about 10 deals in the past 5 years using this approach. Check it out!

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Here is why my houses sell fast…

1. Watch the video, this will explain the state of buyers when they view my house.
2. I love veterans.
3. My houses, come fully stocked with new carpet, new paint, new appliances, 8 full rolls of toilet paper, a doormat, new blinds, pots and pans, rugs, paper towels (all things buyers can’t afford)
4. I have a $3k agent bonus (who just got done showing 50 homes -- YES, that is the average number of homes shown before they come to my house).

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This is the “poppy” version of my video which the Skydiving place edited and I had no control over. Its cool but I’m trying to get a better version out there. By the way, Steve Mills, another successful real estate investor and dude sitting next to me, he crapped his pants.

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Picture description: Guy with long hair:  FHA (Federal Housing Administration)….Guy getting laid out: builders and investors who have been selling lots of properties to FHA financed buyers.

The Wall Street Journal put out an interesting article tonight. So interesting and yet so subtle that I had to blog about this.

The article titled, “Behind FHA Strains, a Push to Lift Housing” highlights the following main points:

• FHA backed mortgages now account for almost a quarter of all mortgages issued, up from 3% three years ago
• There is high concern that a large amount of FHA borrowers are upside down on the equity of their homes
• FHA’s default rate is soaring, causing many to worry that it will become another burden on taxpayers
• FHA’s aggressive approach to increase market share has had a strong impact on solidifying the housing market
• To handle the political “heat” that may be coming down, FHA is going to probably get a lot of pressure to tighten up its lending requirements more than it currently has in place and finally….
• Mounting losses by FHA will lead to “imminent pullback”

Ok, what does all this mean for the average flipper out there who has been taking advantage of some of the best flipping opportunities in years?

My humble opinion….

The FHA is simply a political “Yes man” to whatever is politically pertinent at the time. US taxpayers are extremely frustrated with the tax burdens our government is accumulating. The idea of a FHA Bailout will cause a political lightning rod of angry citizens.

The knee-jerk reaction to this is to tighten up the levers quickly, despite what underwriting standards FHA may announce. We have already seen this with Fannie. Fannie claims to underwrite up to 10 loans for an investor but yet the mortgage originator will not touch these underwriting opportunities because different standards are implied.

This will mean immediate scrutiny and increased pressure particularly for investors and builders. FHA already has implemented several strategies to deter investors from flipping properties to homeowners using FHA financing. The process of flipping a home to FHA financed buyers is grueling. I know because I just finished selling 6 this month. 

If you thought waiting 90 days, providing detailed list of repairs of getting 2nd appraisals was tough….be prepared for worse than this.

How about something stupid like this: no flips for 180 days…(period)! 

With losses mounting, FHA has announced it is hiring a new “credit risk” guru who is going to figure out how to limit risk. Listen flippers, don’t get pissed if all your flips suddenly die off because FHA kills your deal somehow. They got 25% of the market!! They can do whatever you want!

Here is where I am going….If you have plans to flip houses or if you have flipped many houses to FHA borrowers, its gonna end! Instead of getting caught in the crap, readjust now. Figure out how to flip homes to conventionally financed borrowers!

FHA is going to blow up any deals you have. Investors have always been an easy target. They will be again. The FHA understands that it has had a powerful impact in solidifying the housing market and it isn’t going to just come out and say, all borrowers must now put down 10%. They understand that the majority of their borrowers are half subprime….its always been that way. So, if you can’t put the screws to directly to the borrowers, where else can you tighten credit? To give the public “feel good” answers, the credit czar is going to come out and say stupid crap like “after diligent analysis, we have determined that greedy investors and builders flipping quickly renovated or built properties is the cause of high amounts of delinquency, therefore, we are going to put the smackdown on them!”

Hey, somebody needs to get some blame, mine as well be the greedy capitalists.

Flippers, quit whining about it or ignoring it….adjust to it and take control! Go find your own lender and price your deal well enough that conventional financed buyers will make an offer. 

I’m not going to wait for FHA to pull the rug out from underneath me. Lets see what happens in 6 months.

Bob Norton

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The video explains it all….

Any comments?  Let’s her ‘em!

PS -- JP and I decided to open up for 100 new KISS Flipping students on Saturday 8/1. Anyone wanting in should be sure you’re on the waiting list.

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For small business owners, Obama is like this swine flu thing….its doesn’t feel like its really affecting you until about a year later where possibly 2 billion people get the thing. Obama is openly assaulting small business owners with his various tax agendas. We don’t feel it now, but in a year from now when we go to do our taxes…..

AND speaking of agendas, the guy has pushed through so much crap that its hard to keep up. Dumb and dumber (Reid and Pelosi) make it bad as well.

What is the point of this blog?

It appears I saved about $6000 from a program Obama pushed through

I called Countrywide yesterday. I told them that my rate was ridiculous and I would like to talk about refinancing. See this house is currently a rental and well, I’m losing about $550 a month in negative cash flow with it rented out. Well, I got routed to somebody in mortgages and right there on the phone for the next 30 minutes, they refinanced me from 7.875% 30 year fixed mortgage to 4.675% 30 year fixed!

Its called the Homeowners Relief Act. Here are some highlights….

* 720 Credit Score
* No Cash Out, No Income verification
* Doesn’t matter if its a rental or personal residence
* The press some button on their computer to come up with the value in 10 seconds, so…No appraisal
* One time fee of $400

Somehow, someway, I benefited from Obama’s liberal programs

And its feels kinda good. Here’s what he said about a guy like me…

“The plan I’m announcing focuses on rescuing families who played by the rules and acted responsibly,” Obama said, announcing the Homeowner Affordability and Stability Plan, or HASP.

BUT,  I don’t plan on having him solve my problems. Sorry America, I take responsibility for Bob.

To learn more go to you can Click Here and Read this article.

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I often have wondered how so many people got caught up in Madoff’s $50 billion ponzi scheme. I would never be that nieve I thought to myself…..I mean those Madoff guys were just lazy fools who didn’t do their homework….Investors didn’t do their homework and wanted to believe in something that wasn’t real. Madoff had a knack of knowing how to appeal to people’s greed and “I’m not greedy.” Uh- huh, sure. Here is how it almost happened to me…

The Setup

A coaching student approaches me with a list of properties where I can buy homes that are worth $300k for about $100k each. Most of them need $10-30k in work. I know the area’s these homes are located in and they are great deals! The person who gave him this amazing lead was a lawyer who worked directly with asset managers at several different banks. Since the lawyer had the inside scoop, he was going to “hook us up” with some great deals. Fair enough. No Earnest Money was required, we just needed to close extremely fast and had to show proof of funds. He claimed that the properties were all being routed through TARP funds and that the FDIC was involved, this is why they were selling so cheap.

The Purchase Agreement

So we sign a purchase agreement on a Friday and he says we will have the signed P/A from the seller by Monday, but doesn’t happen. Tuesday he said, “this will be done today”….still nothing. On Wed, he says we will have it by 3:30 P.M. but that we should be ready to close very quickly and that we would also have “free and clear title” that day. The title company was somebody I have never heard of but was being underwritten by First American. Well, this guy started to lose a lot of credibility in my eyes so I wanted to see what was up. This lawyer said that all the properties were running through a small local bank that had been taken over by the FDIC (that was true) BUT I knew somebody that was pretty chummy with the head of the bank. So, I got this cell phone number and made a call….

The Phone Call

I left a vm for the CEO and managed to talk to his head assistant. I said, “there is this lawyer who is claiming to be selling some properties that somehow ran through your bank and I’m just verifying that his not bogus. I told her they was about 15-16 of them located in Oakland County, MI. She says, “is the lawyers name so and so” and I said yes. She said, its a complete scam, this guy has a warrant out for his arrest, we have nothing to do with these properties and the local Sheriff is looking for him!!! Come to find out, this guy has been giving the same pitch to several other people and acting a little fishy and they got all the way to closing before they made a call to the same head assistant and CEO of the local bank and then they brought in the sheriff!

The Sheriff

We talk with the Sheriff a couple minutes later and learn that he has multiple cases against this guy! We answered questions for about 30 minutes and then we were done. The lawyer wasn’t a lawyer. He never my student at an office, Starbucks instead….we started putting two and two together and realized how quickly we had gotten sucked into a huge scam.

Lessons learned

1. Just because they say the right thing, do the right thing, look the right way, doesn’t mean that its right! Beware of lists!

2. Also, whenever a lawyer meets you at Starbucks….that’s a deal killer

3. Big scams are easier to pull off than small scams!

4. Don’t think it can’t happen to you.

P.S. This all happened at the end of last week. I couldn’t use names because this guy is still being pursued. Its an open case!

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Taking advantage of the changing Real Estate Market is what I do best. Right now, in Michigan, Florida, California and a few other high REO hot spots, the market has hit a sudden bottom. Not only has it bottomed, its actually getting a little crazy and moving back up! Homeowners and Investors are paying 20-25% more for properties than they were a month ago. I’m mildly shocked.

Here are the 4 reasons why I believe this is happening.

So, what am I doing about it? Well, I’m going on a buying frenzy. I’m making offers on everything that’s distressed! Everything! I’m also staying very short. My goal is to have an inventory of 20-30 rehabs in place by June 1 and have all of them sold by Sept 1. I am also following my formula of 60% LTV less repairs. Roll up your sleeves, its time to adapt and make more cash!

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The amount of “multiple and best” scenarios is picking up at a very fast pace on the REO side.

Its starting to feel like 2005 again. If I (um well I mean my coaching students/partners) aren’t out to look at a well priced REO within 30 minutes of it being listed, then its too late….

All the same games too, like, missing keys in the lockbox, missing lockbox, sign removed out of the yard.

I was also talking to Ron and Pete, 2 REO realtors and they said that their listings are down 60% since December. 60%?!? How the crap is that possible in Michigan? Where Detroit has a 22.5% unemployment rate? Its the “moratorium” that the banks started doing last fall. The banks are just letting their defaulted mortgages just sit there!

The most extreme example I saw of multiple and best scenario was a deal Kody and I lost out on. Listed for $240k, it sold for $351k after 15 “highest and best” cash offers were submitted over the weekend. I didn’t think anybody else had that kind of cash in Michigan. That dude is going on my buyers list.

I also thought this was happening in the Michigan market only. Then I read Steph’s blog in Florida and am wondering if this is happening more and more around the country.

Either way, it seems like a temporary bottom. My neighbors have made 2 payments in 16 months and the bank hasn’t put out the notice of default yet. Gotta wonder how many more scenarios like that are going on around the country.

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