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Investing Strategies

5 Amateur Hour Foreclosure Mistakes to Avoid

amateurWe’ve all had embarrassing moments. Some laughable and some downright humiliating… like, bury your head in the sand and don’t come out for years kind of embarrassing.

But if you could find ways to avoid those embarrassing moments, if you could take advice from someone who’s been there (um, me), wouldn’t you?

The answer goes without saying. Hey dudes and dudettes, it’s Cody Sperber back with some awesome sauce to help spare you some red-faced moments by sharing with you 5 rookie mistakes to avoid.

#1 Don’t Base Your Price on the Bank

Just because the bank lists a sale price doesn’t mean you should take that price, well, all the way to the bank. What I’m saying is the bank’s listed price isn’t the end all, be all. You’ve got to do your research. But, simply accepting the bank’s price as is, and then reducing it by 30% isn’t the way to go.

You need to calculate market value, add the repair amounts and account for your profit. We’re talking a big difference in the bottom line number here, guys, so do the due… diligence, that is.

#2 Take Alternate Routes

The MLS is great. Really, it is. And agents are a great resource too.

But consider other ways of finding motivated sellers – like banks. When it comes to investment opportunities and potential profitability, there are no shortcuts. There are multiple routes that can lead to success, so don’t rule any out.

#3 It’s Okay to Wet the Bed Every Now & Then

Being a rookie means (figuratively, of course) that you’re still in training pants… pull ups, if you will. And that’s nothing to be ashamed of. We’ve all been there, and you’ve got to crawl before you walk, right?

So don’t act like you’re in big-boy pants when you’re not ready for them.

There’s no pulling the wool over anyone’s eyes in the game of real estate investment. People see right through BS, especially Realtors and REO brokers, both of whom you should contact. Just don’t make the mistake of thinking you’re bigger than you really are. If you’re not a cash player, don’t act like you’re ballin’ when you’re really beggin’. Know what I mean?

There’s a fine line with ‘fake it ‘till you make it’ (which I’m cool with), but you need to be genuine and real. Otherwise, get used to the curb, because you’re going to get kicked there… like, a lot.

paperwork# 4 The Proof is in the Paper Trail

The days of simple letterhead and brief statements from funders are long gone.

The internet has forced us to generate more detailed statements for REO brokers. So save yourself the time of back and forth banter with brokers and be sure to include exact dollar amounts and copies of account statements as proof of funds.

#5 The Exit Is That Way

When you’re on an airplane, do you take a moment to glance at the exit signs? My guess is – no matter how many times you fly – you always take a mental note of the emergency exits. I mean, it’s probably good practice to see exactly where you need to go should an unexpected exit - that requires you to go all Ray Lewis and whatnot on women and children in your way – come up.

The same kind of thinking applies to the real estate investment business (minus the funny and slightly inappropriate mention of throwing blows at women and children). Before you buy any property, you gotta know your exit strategy.

In fact, you should know your strategy before you make an offer. Once you know what you plan to do with the property, you will know what offer to make.

There You Have It

So there you have it, friends. Learn from the mistakes of others (who, me?), and avoid unnecessary awkward moments. More importantly, avoid looking like a rookie. It’s okay to be new – you’ve gotta start from somewhere – but avoid big mistakes whenever possible. Just because you’re a rookie doesn’t mean you’re a fool. 

Do It To It! Immediate Action Steps

Don’t bank on the bank.

Know your exit strategy.

Provide brokers with thorough paperwork and proof of funds.

Embrace your newbie status but take measures to work like a professional, always.

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