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.

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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