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Recently, we tracked Dana down for a phone interview (on his cell phone, as he was on his way to evaluate yet another property), to learn more about what's made him successful. In particular, we wanted to find out more about his "CRE Kit," and understand why it's been so helpful in winning clients.
ForeclosuresMass Monthly: Welcome Dana, and thanks for speaking with us. We've heard a lot about your CRE Kit, and we're eager to hear more about what it is and how you use it. Before we dive into that however, tell us a bit about how you got involved in foreclosure investing.
Dana Robinson: I was heavily involved in fixer uppers for a while, and even spent time as a carpenter, so that I could really learn the ins and outs of the business. Foreclosures were always an area of interest, and so I began learning what I could about them. I had the sense that if I could acquire the properties for less, I could turn a bigger profit.
FMM: How did you go about educating yourself regarding foreclosure investing?
DR: Like most people, I did a little bit of everything. Real estate investment clubs, seminars, networking, you name it. I focused quite a bit on investment books as well. Basically, whatever I could do to learn the business.
FMM: Many long time investors come to rely on a handful of deal structures that they've found work best for them. As a seven year veteran, do you have some favorites?
DR: I do, and although it depends on the situation at hand, there are two methodologies that I use regularly.
The first is a short sale. In this case, I negotiate with the lender to take a discount on the debt owed. For example, if a home is worth half a million and the owners owe half a million, I might go to the bank and persuade them to take less, maybe $450,000. This is a win for everybody: The bank gets more than they would if the property went to foreclosure, the homeowner avoids foreclosure, and I acquire a property at a discount, with an opportunity to flip it and make a profit.
The other is something called a "Subject to." In this case, I take over the existing financing subject to what's already in place. So, for example, I did one of these recently where the homeowner had a $300k home, and due to an adjustable rate mortgage, had seen payments rise from $1,600 to $1,800 a month. They were unable to meet the higher payments and were facing foreclosure. We came in and brought the payments up to date, and in the process were able to give the homeowner some cash to help with moving and other expenses. Again, we then owned a property that we could either rent or sell.
FMM: Great examples. Of course, doing these deals requires persuading home owners to work with you in the first place. Tell us about your CRE Kit, and how it's helped in this regard.
DR: Happy to. CRE KIT stands for Credentials, References and Endorsements. In a nutshell, it's a three ring binder, whose purpose is to pull together information about me into one place. I use it as a means of clearly conveying my qualifications and experience with a potential client or partner, and I take it to all my meetings.
FMM: Can you say more about what's in it?
DR: Sure. Credentials includes licenses, association memberships, educational certificates and things like that. References come from attorneys, mortgage companies, appraisers, contractors, and of course, past clients that I've helped. (These are typically in the format of a letter written to me expressing satisfaction with my work.) And finally, endorsements are also from clients or professional individuals I've worked with, but unlike references, which simply say I've done good work, these are generally stronger recommendations for others to use my services. All in all, the idea is to have something concrete in hand which sells you, as an experienced professional, to whomever you want to do business with.
FMM: Fantastic idea. How has it helped you?
DR: I got this idea from another investor who made the point that when you're dealing with homeowners in foreclosure, you've always got to keep in mind that they are both under stress and receiving solicitations from lots of other people. The CRE Kit puts homeowners at ease, by helping them see that I'm a guy who's around for the long haul, does things ethically and honestly, and most important, there to provide a solution, not to hustle them.
FMM: What kind of reaction do you get when you bring it out in a meeting with a homeowner?
DR: Frankly, relief and gratitude. These are generally good people who for one reason or another have found themselves in a bad situation. Just last month, for example, I met with a married couple facing foreclosure on their three bedroom cape on the south shore. I showed them my CRE Kit as we spoke, and in the end, helped them negotiate with the bank to keep their home. Afterwards, the homeowner said, "I knew that you were the real thing right away, because you didn't just come in with a lot of fluff and talk."
FMM: Any additional recommendations on how to use a CRE Kit most effectively?
DR: First, go out of your way to get references and endorsements. Happy clients and partners will give them to you, but it's up to you to ask. Right after the deal closes is a good time, since if you've done good work, it's fresh in their minds.
Second, you may want to create different CRE Kits for different situations. I have three that I use: one for the home owner, one for meeting with other professionals, and one related to credit. I bring the appropriate kit depending on who I'm meeting with.
FMM: Thanks so much for your time Dana. The CRE Kit sounds like a fantastic tool for foreclosure investors at any stage of their careers.
DR: My pleasure.
Dana Robinson is a licensed real estate broker and public auctioneer. He specializes in foreclosures in Suffolk and Norfolk county. Contact Dana via e-mail: drobinson@jackconway.com or phone: 617-676-4039.
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