Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.
As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...
From Dennis Fassett, Cash Flow Mercenary...
The real estate market moves in predictable cycles. It goes up. It plateaus. It goes down. It stabilizes. And it goes up again.
It’s a dance that’s been happening since housing got started. And it will continue long after we’re gone.
If you’ve been trough a cycle or two as an investor, then you know that you can make money pretty easily during any part of the cycle. The market shifts, and then so do your tactics.
Cause and effect.
But if you haven’t been through a full cycle, or if you haven’t even been through a couple of parts of it, then you’re in a dangerous situation.
Because you have no perspective.
I’m seeing it frequently in the faces of the new folks at the meetings I occasionally attend.
The look is happy and positive. From making money.
The challenge is, they think they can make money in any situation, regardless of the risk.
I saw this play out in my local market recently… on Facebook, which seems to be the venting tool of choice these days.
Now you know how many times I’ve cautioned people to stay away from Detroit, right?
That it’s a school of sharks and if you’re from out of the area you’re not only going to get eaten alive, BUT you’re going to lose all of your money as well.
I think this was Newton’s fourth law.
But don’t you know, there’s always someone who thinks they’re special, and that the laws of physics and gravity don’t apply to them.
They put what on FB?!
The post I saw was from just such an individual. Not only out is the guy of state, but he’s out of the country too. And hasn’t been on the ground here for 2 years.
His post (errors included) read like this:
“Hey Guys. So I have a situation in Detroit.
2 years ago I purchased a house in the Wayne county tax sale in Bagley neighborhood. I was working on it but lost communication with the contractor for the last few months.
Anyway, I came to Detroit this summer and about a week ago stop by the house. There was a car in the drive way and while knocking on the door a guy opened it and claimed that he was the owner for the house.
I don’t know why but I had a feeling something is wrong so I went down to Wayne county treasure to pull up the recent deed and the most updated deed is from a few months ago stating that the house was QCD to this guy from my company for $500.
Few issues here
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There is an agent named mark turner signing in behalf of my company. I have never heard this name in my life.
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The name of my company is completely messed up with spelling mistakes.
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I cant find any records of the public notary that is signed on the deed online.
Obviously I'm a victim of a deed fraud here.
What do I do?
I did spoke to a lawyer today and he said I should go to court and the judge will decide who is the real owner for this house.
Putting a side the money that it will cost. He said it will take about a year to get a ruling!!”
What had happened was.
So while this guy was overseas and the house was vacant, some scammer sold the house to someone with a forged quit claim deed, and actually FILED THE DEED with the county.
And the overseas guy didn’t find out about it for a couple of months!
What he didn’t say in his Facebook post was that he and a couple of his overseas pals are buying crap properties in crap areas here because they’re cheap, and then renting them out.
Why does that matter?
Well, because the cost for him to sue and get the property back will cost more than the house is worth.
And if he does indeed win?
Then he gets back a house that will be so trashed, it’ll cost him more than he paid for it to make it rent ready again.
The crazy thing for me watching this unfold on Facebook is that the guy is so indignant because he got scammed that he’s gone and gotten himself an attorney and he’s hell bent on getting the house back.
Unbelievable. And nutso.
Be careful out there. You can lose money.
Say something.
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Dennis Fassett
earned a BS in Economics and followed that up with an MBA in finance. After working and corporate finance and banking for several years, he started buying single family houses, and quickly built a very nice portfolio of cash flowing rentals. When the credit markets started to dry up and he couldn’t get any additional single family mortgages he shifted his focus to apartment buildings. He now has over $3 million in rental real estate. He manages most of it his self and still has a day job. Dennis has even created his own Private Equity fund to buy apartment buildings.