What is Wrong?! Investor's Block?! (long) - Posted by Anon

Posted by DanIL on May 21, 2001 at 06:15:38:


I feel the same way. Some of the people I have approached about what I am beginning to do have really put the venture and me down. I look forward to meeting with you and Mike in the near future.

What is Wrong?! Investor’s Block?! (long) - Posted by Anon

Posted by Anon on May 18, 2001 at 12:33:38:

My name isn’t important. And this is embarrasing. So please excuse me for posting anon.

I’ve invested successfully in the past few years. Never lost a dime. Wholesale and retail flips, one rehab, one owner-financed sale. My last property took some unexpected twists (small fire after I bought it), and I ended up spending a lot of money on it, including carrying costs for a YEAR! It set me back, and hurt my credit because of the borrowing I had to do. Insurance only covered so much, and I had to do a lot of work to get it ready for retail. Now I have credit accounts (none late) up the wahzoo, and my FICO went from 730 to 630!

I’m doing this part-time, since I have a full-time job. I’ve used investing as a way to compensate for my wife’s income so she can stay home with the kids. It’s worked well, up until now.

I told myself that I have to get BUSY! Get some calls coming in again, do some wholesale flips, do some retail flips…anything QUICK to get me out of this hole. I’ve got an ad running every day, and I’ve just sent 3000 postcards to out of state owners. I’m getting pretty good response…2 to 3 calls per day.

Here are my problems:

  1. I don’t have access to much MONEY! I’ve always invested, in the past, having access to my credit accounts. I could easily make-up back payments on pre-foreclosures, or give a few thousand here and there…or even tens of thousands if it was a screaming quick deal. That gave me confidence in making offers. Now, I don’t have access to this money and the type of deals I have to let SLIP BY is killing me! All I can do now is make 65% cash offers (hard money), or ask for owner financing (half now, half later, etc). I am not interested in buying with L/O…I personally don’t like the risks.

  2. The sellers calling don’t want low-ball cash offers or owner financing! Many understand I need a profit, but are only interested if the offer is around 90% FMV. And some of these are motivated…really they are. The market here is hot. They know they can just list with a realtor at a discount price instead of taking a huge hit.

  3. I’m losing confidence in myself. It was so much easier before my last property fiasco. Now I over-analyze. There are times I talk myself right out of even making an offer. I think to myself, why in the hell would this seller take this low offer and let me take his equity? Is he stupid? Is it really my job to try to find the dumb ones and talk them into letting me take their equity? I don’t like that! It makes me feel like a used car salesman. I ask myself, would I like it if it was my mother giving away all her equity to an investor?

  4. The competition has grown here lately! Now, many times when I do make an offer, I get the response, “Well I just talked to another investor from the paper, and his offer was much better”. Since I’m working 9 hours a day, I can’t just hop in the car like the full-timers I’m competing with. It didn’t used to be this competitive.

I’ve been planning to go full-time (quit the JOB) for a couple of years. I was excited at the prospect, and have goals and plans I’m trying to accomplish getting there. I love REI. But now I’m having serious doubts about my abilities to do it. I’m feeling VERY down…wondering how I ever dreamed of such a silly thing.

If I only had access to some MONEY, I think I could get going again. I don’t know at this point. Can anyone relate to this at all? Any advice?

Re: What is Wrong?! Investor’s Block?! (long) - Posted by SandyFL

Posted by SandyFL on May 18, 2001 at 20:32:33:

I have some clue of what you are speaking. I am not as eloquent as you, anon, but since I can’t respond to you privately, here goes.

The one thing that might help you out of your doldrums is inspiration - meeting with like minded individuals. Club meetings, other area investors, or seminars. Me, I’m going to Atlanta to hang with the big boys and get inspired. Then I’m going to get Charlie’s course and do that subject-to stuff and hope to heck she never sells it to anyone else in my area (har har). I mean, I was out of investing long enough that I just recently started doing practice cold calls again to get the hang of it. And maybe at first I’ll look at Lonnie deals and stuff that is less $$$ intensive to cut my teeth on.

At least you are continuing the marketing, and that’s a really good thing. Besides, Tony Robbins always said that if you are frustrated, it means that you know you can make it better, and it’s likely that you are about to have a big break-through. So keep after it! I bet you are way more confident than you were 5 years ago! :slight_smile:


Re: What is Wrong?! Investor’s Block?! (long) - Posted by Jim IL

Posted by Jim IL on May 18, 2001 at 18:58:09:

I understand where you are coming from.
No money and no credit can hamper your investing, when you use the strategies you seem so accustomed to.
So, time to re-invent your investing personality.
Why not do L/O’s?
They accomplish several things, all of which can help you oversome some of the things you are faced with now.
You can get in for little to nothing, gain option money upfront as profit NOW, cash flow to help get rid of the reliance on that blasted paycheck, and a back end profit to boot.
And if you are not comfortable with the position of being in a sandwich lease option, then perhaps you need to study it more.
This is a VERY LOW risk way to invest in my opinion.
Control without onwership is a beautiful thing.
Think about how “Comfortable” you are right now in the predicament you are feeling.
Just try to buy some other ways than what you are used to, such as;

…using contract for deeds, and subject to deals for while.
These can all be done with NO MONEY and NO CREDIT!
Use what resources you have now to buy some materials to learn how to do these well, and to market yourself as a home buyer extrordinaire. (sp?)
The bottom line is, if what you are doing now is not working for you, then DO SOMETHING ELSE!
PLUS, once you restore your credit, build it up more, and increase your income from learning these other methods, you will now have the tools to solve more sellers problems, which will also increase your income.
Trust me here, you can make a decent living in this business with NO MONEY or CREDIT, because I’ve done it SEVERAL times now.
While there is more money than before as a result of the deals I’ve done, and my credit is slowly being rebuilt, I still prefer to do deals not using any of MY money or MY credit.
What’s the point when I do not NEED to?
I keep what credit I do have for use in an emergency, or to get something special for my family when I do not have liquid cash at the moment. But, I also do not use it unless I have a specific plan or deal coming to fruition to pay it off SOON!

Don’t kick yourself when you are down like this, KICK START yourself, and learn some new tricks.

In fact, I have a confession, my market here STINKS now for the type of investing I had grown accustomed to, so I am in the middle of changing some things to see what will work best to keep my family in good financial status. All while still trying to build my cash flow up to allow that good financial status to continue no matter what the economy does.
And CASH FIRST for TODAY is my first rule! Cash Flow for tomorrow is second, but just as important.

Good luck, and if I rambled too much, blame the allergy meds,
Jim IL

Re: What is Wrong?! Investor’s Block?! (long) - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on May 18, 2001 at 13:39:37:

Hi there,

First of all, no need to be ashamed of anything. That’s the nature of the beast - there are ups and downs. Look at the national economy, for example. You’ll have years that are better and years that are worse.

It’s normal. On occasion we all become a victim of circumstances beyond our control (i.e., fire, vandalism, etc.) On occasion we all make bad decisions, or just get passive for no apparent reason.

All those things slow us down.

Don’t kill yourself and don’t over-analyze. Understand this - you are doing precisely what you can with the resources and limitations you have right now. There are ways to do better, but they require developing new resources.

It’s great that you believe you should get busy and you did. But that’s not enough. As you already learned you were missing on a lot of opportunities.

You did, mentioned several objective reasons for your slowdown: lack of readily available funds (over 65% LTV), increased competition, lower margins, lack of time to transact and react quickly when someone calls.

Let’s look a little closer at these issues. In fact, several of them are related to each other: when you have one, you have the other, and vice versa.

  1. Lack of readily available funds. You were relying on credit cards and credit lines to carry you until recently, but you are now maxed out. Credit cards are a good source of short term capital to swing the deals. However, it also tells me you have not been doing enough volume of transactions, or you would have run out of your money much quicker.

Solution: work on developing alternative sources of funds - either partners or private lenders. I personally don’t like to split profits, so doing business with partners is not my thing.

Private lenders are terrific resource for paying down payments, reinstating foreclosure arrearages, just plain tapping into your existing equities and writing yourself a $20,000 check to go and play or invest in a new project.

I’ve borrowed close to $1,000,000 from private lenders in my area over the years in small increments of $10,000-$40,000 for just these purposes.

Work on developing and cultivating relationships with a few private lenders and you’ll never run out of money.

  1. Increased Competition. There’s nothing you can do about it. With the abundant amount of educational information available today on money making opportunities (including real estate) there bound to be more and more people coming into this business. Your job then is to be better, faster, more responsive, more educated and HAVE BETTER RESOURCES to handle different situations the homeowners are in.

  2. Responsiveness. Obviously, if you have 8 hours a day job, your response time will jump HIGH as compared to the full-timers. Can’t do much about it. Got to go full time to compete effectively.

How do you do that? Well, your focus should be on replacing your paycheck in the FASTEST POSSIBLE WAY. That means concentrating on building a steady monthly cash flow from the houses you buy and sell.

I know we all enjoy a $5,000-$10,000 checks much better than a $300-$500 monthly check. Flipping for cash will produce larger checks. Flipping with Lease/options, for example, will produce smaller, but long lasting monthly checks.

Get enough of those, and learn how to increase the amount you collect monthly and you’ll be FREE from your JOB.

  1. Lower margins. Again, that’s a function of (a) increased competition and (b) the fact that there’re just not enough houses out there that can be bought at 40-50% discounts in any balanced marketplace.

These great deals with large discounts do happen now and then, but they are typically not in the majority. Can’t count on them all the time. There are many more deals you can buy at 15%-25% discounts than those at 50%.

One of the skills astute investors possess is the ability to squeeze more dollars out of what doesn’t seem like a killer deal and do A LOT of them. It sounds like you have already learned some of those skills. So getting your resources in order will help you to make much more money.

Hope this helps a bit.

  • Alex Gurevich

Re: What is Wrong?! Investor’s Block?! (long) - Posted by anon

Posted by anon on May 18, 2001 at 12:45:57:

I’ve got a similar problem. One house ate my lunch. I finally got wise and sold it at a loss, but got a bit of cash out of the deal, and was able to pay down some debts.
Why don’t you look for some smaller deals, and set up most of them so that you get a cash stream going. You also need to look around for some private money.

Re: What is Wrong?! Investor’s Block?! (long) - Posted by Greg Schultz

Posted by Greg Schultz on August 30, 2001 at 15:26:00:


When you buy using the above LO with no money, how do you do that? As I understand it these types of sellers just want to walk right?

Where do you get the money to do the marketing to get these sellers calling you?

And this works only on properties where there is no equity, correct?

Thank you

Re: What is Wrong?! Investor’s Block?! (long) - Posted by Mike Schmidt (IL)

Posted by Mike Schmidt (IL) on May 18, 2001 at 19:29:18:

Alergy meds? Me thinks maybe it is a reaction to all that yeast consumed over lunch :slight_smile:

Re: What is Wrong?! Investor’s Block?! (long) - Posted by Greg Schultz

Posted by Greg Schultz on August 30, 2001 at 15:08:15:

How do you flip using L/O’s


Re: What is Wrong?! Investor’s Block?! (long) - Posted by DanIL

Posted by DanIL on May 19, 2001 at 08:46:03:

Hey Guys,

Wish I could have made it to that lunch!
Sorry I missed the callback. I’ll let youy know how Sunday’s search went. Would like to meet up soon.

Shhhh… - Posted by Jim IL

Posted by Jim IL on May 18, 2001 at 19:35:32:

This was supposed to be a secret.
Although frankly I think it was a combination of the two.
Then again, you talked to me for a while, or listened to me ramble.
I do that once in a while I hear.

Take care,
Jim IL

Re: What is Wrong?! Investor’s Block?! (long) - Posted by Mike Schmidt (IL)

Posted by Mike Schmidt (IL) on May 19, 2001 at 12:58:15:

Cold beer: $4.00
Great Food: $7.00
Conversation with Jim and his wife: Priceless

Dan, I am sure we will be doing it again, soon I hope. Great people they are, thats for sure. Plus ya gotta like a guy that rolls up on a Harley : )

Re: What is Wrong?! Investor’s Block?! (long) - Posted by Jim IL

Posted by Jim IL on May 20, 2001 at 17:18:51:

Thank you for the kind words, same to you sir.
It would be nice for some other REI’s to join us next time. (DanIL)
As you will learn quickly, there are VERY FEW people who we can talk to about what we do and have them understand or be interested, other than to try and tear us down.
So, a small group who meets once in a while is always nice, this is why I like the conventions that this website sponsors.
Anyway, lunch was fun, my wife and I both had a good time, we will do that again and perhaps get your wife along as well.

And you know, a few deals and you could also pull up on a nice Harley…the weather sure has been right for it lately.

It was nice to have met you,
Jim IL…
…and my wife Gloria too :slight_smile: