ForeclosuresMass - ForeclosuresMass Monthly - Nothing Succeeds Like Success - An interview with full time investor, Derek Ebrecht (November 2006)

Derek Ebrecht hasn't been investing in foreclosed properties for all that long. In fact, his first deal closed less than two years ago, in February, 2005. Since that time, however, Derek has continued to grow his business, and today, he completes several deals each year. We caught up with Derek to learn more about why he focuses exclusively on foreclosures, as well as what's worked for him to date in closing profitable deals.

ForeclosuresMass Monthly: Welcome Derek. Can you tell us how you got started in foreclosure investing?

Derek Ebrecht: Sure. I was working full time in another field, and while I knew I wanted to get involved in real estate, I wasn't exactly sure at first what my particular focus would be. So I decided to do what I could to educate myself about real estate and investments.

I took courses online, read books, joined a mentoring group and got involved in a local investment club. I just did what I could to learn as much as possible. As I learned more, foreclosures seemed to make a lot of sense. At this point, that's where I spend my time.

* Next 37 17 investors only!

DE: The thing I like about foreclosures is that the people you work with tend to be highly motivated. That's an essential piece for getting a real estate deal done. People facing a foreclosure know they need to take action, and the key is to convince them that you and your solution are what's needed for their situation.

FMM: On that point, what do you find works best in convincing a home owner to work with you?

DE: Well, of course, the numbers need to work. These are people who are under a lot of stress, and they have many folks coming at them from all kinds of angles - bankruptcy attorneys, agents, mortgage people, banks, etc. So for starters, the deal I offer has got to be competitive. But beyond that, it really comes down to building rapport with the homeowner. In fact, I'd say that if you're not a real people person, you'll have a tough time being successful as a foreclosure investor. You can learn a lot in this area, and certainly improve your interpersonal skills, but I think that on some level, either you're good at building rapport and trust or you're not, and people can sense that.

DE: When I began I was trying everything, including just door knocking and generally fumbling away. It always seemed to me though, that if I just kept at it, things would start to click. Eventually, that's exactly what happened.

DE: Most important: Keep moving. It took me five or six months of work until I closed my first foreclosure deal in 2005. That may seem like a long time, but you have to just keep plugging along. If you stop along the way you lose momentum. The contacts dry up, the opportunities evaporate, and you end up back at square one. So my advice is to stay with it, and believe that things will come together for you.

DE: I think it's important to have a hearty negotiation. In fact, and although this may seem counterintuitive, I've found that if you're too quick to make the deal happen, people often end up with seller's remorse.

FMM: That does seem counterintuitive. Isn't a quick deal what everyone wants?

DE: Well, that's what everyone may say, but in practice, I find that people like to negotiate a bit. For example, we got a call recently from a gentleman who, while not yet in foreclosure, was just tired of dealing with certain things and wanted to get out of his property. We came in, saw that the house had good bones, and felt that with a bit of clean up, we could flip it quickly. So we made him an offer. Not our best offer, but reasonable.

We ended up going back and forth a few times and in the end, he felt good about how it came out. The thing is, had we offered the higher price up front - our true top figure - even if he accepted, he would have been less satisfied.

Think about it. If I give you a price and you accept with no negotiation, you go away wondering if you could have gotten more. In turn, I may go away wondering if I could have offered less. If one side feels like the other side got it all in a deal, something will go wrong, and so negotiation on the way to agreement is always good for both sides.

FMM: That's a great insight. Any final recommendations before we let you go?

DE: Just one... don't cast too wide a net at first. When I started out, I was way too broad. I was sending letters out for anything from Worcester going east. People would call and I'd drive an hour to look at a place. I realized eventually that I was casting too wide a net, and that the standard advice of staying within 30 minutes of your own backyard was valid. Once you become more successful and have more resources, you can always expand, but when you start, do your best to stay geographically focused.

Derek Ebrecht is a licensed Massachusetts Real Estate Agent and investor. He works in the Greater Boston area. He can be reached at derekebrecht@hotmail.com

Did you like this article? You May Also Like:

	Feature Article: Appraising a Property Without Stepping Foot on the Premises Steve Krasnow, Certified Residential Appraiser Determining a property's value in order to make the right offer or bid takes practice and experience. Knowing how to evaluate a property when you dare not step foot past the boundary line is another whole kettle of fish. In this article, Steve Krasnow gives four strategies for determining value - without having to tour the property.
	Legal Corner: Banks are willing to work with investors to find equitable solution Bob Tenney, Cunningham Machanic Bob Tenney, attorney at Cunningham Machanic in Natick, is on the frontline of the foreclosure process. Tenney and his firm review claims by lenders to review properties for foreclosure. If proper conditions are not met, they are also the folks who send out demand letters—the step that begins the foreclosure process for the homeowner. "We send the demand letter and give the homeowner time to reinstate their loans. If that doesn't happen we proceed with the foreclosure," says Tenney...
	Interview With The Expert: Richard Cohen Richard Cohen, Negotiation Coach and Consultant For any real estate investor, negotiation is a part of everyday life. Whether with tenants, contractors or homeowners, any time you are trying to influence someone else, you are negotiating. This month we speak with Richard Cohen, a negotiation coach, consultant and real estate investor, to understand more about this critical skill...
	Feature Article: Conventional Financing for Less Than Stellar Credit Jeffrey Chalmers, Real Solutions LLC Have a so-so credit score and need financing but aren't ready to go the private money route just yet? You can still get conventional financing - if you use a combination of lender and seller monies. Mortgage expert Jeffrey Chalmers explains the lending process and what banks look at when determining your loan amount and how you can work with motivated sellers to help finance that next deal.
	Feature Article: Use Exit Strategies to Reach Your Investing Goals Joseph A. Roche Planning your exit strategies will help you anticipate potential opportunities and problems and how you'll deal with them - as well as ensuring that you don't lose money on a deal. Real estate investor Joseph Roche discusses the six most common exit strategies, including wholesaling and lease options, and how and when to use each one to reach your investing goals.
	Feature Article: Getting Clear For a Great Next Year Sharon Teitelbaum, MA, PCC Lots of people set goals, but as experienced career coach Sharon Teitelbaum explains, that alone is not enough. Read on as Sharon offers five specific recommendations - recommendations which go beyond simply setting goals - to help you start or grow your real estate investment business in the coming year.
	Feature Article: Using Direct Mail Lists to Reach Potential Home Buyers Lois K. Geller Rookie real estate marketers spend 90% of their time on creative when putting together a direct mail campaign. Lois Geller explains why this is a backwards approach - and why you should focus on building a targeted list instead.
	Success Story: One Deal, $90,000... Dominic Kirchner II, Exit Realty Center Full-time realtor and professional investor, Dominic Kirchner II, received his Foreclosures Mass email one Friday afternoon. After reviewing the stats, he quickly downloaded the data and sent out inquiry letters to the people who had received foreclosure notices...
	Interview with the Expert: Incorporate Real Estate Into Your Financial Plan Judy Carryl-Young, Ameriprise Financial Services, Inc. Financial planners often see clients who want to put everything they own into real estate . . . sometimes with disastrous results. In this interview, licensed financial planner Judy Carryl-Young explains why single asset allocation may not be the best choice for you and how you can maintain your financial security by keeping a diversified portfolio.
	Feature Article: How to Become Financially Literate - Without Getting a Degree in Finance Ann Bellamy Think you need a finance degree to understand the real estate "numbers" game? Think again. Ann Bellamy, real estate investor and hard money broker, gives you seven tips on how you can become financially literate and comfortable with real estate investing. (Hint: Don't be afraid to take chances.)