ForeclosuresMass - ForeclosuresMass Monthly - Interview with the Expert - Eileen Schwartz Plays Real Estate Matchmaker (April 2008)

Eileen Schwartz has been in the real estate investing game for her entire life - having learned about investing at her mother's knee. "Other mothers took their kids to the mall. Mine took me out to view real estate," she quips.

In addition to recently closing on a 118-unit apartment building in the Atlanta, Georgia area, Eileen has also ratcheted up her real estate game in Boston and Miami where she brings together buyers and sellers of single family homes. She sat down with us recently to talk about her real estate experience - and what her current plans are.

ForeclosuresMass Monthly: Eileen, have you always been a fulltime real estate investor or did you have another job?

Eileen Schwartz: I have a financial planning practice that I started 35 years ago. Real estate was a second job - and before we go any further, I want to say my husband and I have been investing together.

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Anyway, my husband and I started investing years ago. My clients knew that I was buying and selling and would ask me to buy properties for them. A client would say, "I want to buy a property" and I would say, "Ok, give me $150K and five years. You'll have the benefits of real estate without the headaches of managing the property." They had to trust me, but they made a lot money doing so.

About 10 years ago, we started doing this in earnest. We live in Newton and over time we began to know Newton really well. Ten years ago you could buy a two-family with 20% down; cash flow was neutral but appreciation was great. So we bought as many two-families as we could for clients - all based on their personal portfolios.

FMM: What are you doing now to pick up the slack? You mentioned your apartment building in Georgia. Are you still investing locally?

ES: Yes, we are. We're now affiliates of All American Home Buyers - a nationwide program. Basically, what we're doing is buying and selling single family homes from motivated sellers in the Boston and Miami areas. The company name for this part of our business is Paramount Home Solutions, LLC.

ES: No, not foreclosures. We're looking for people who aren't in foreclosure but need to sell. For example, people getting divorced, those who've relocated, or someone who inherited a property because a family member. The normal selling process can take a long time, but motivated sellers can't wait months. We help them sell their properties faster by buying them.

Often times these properties are sitting empty on the market - which is why the sellers are so motivated. People who own empty properties have a real headache - you have to worry about vandalism, paying two mortgages, and insurance. That's because if a property is empty, you pay a different type of policy for an "unoccupied" property. (And if your insurance agent finds out you didn't specify the property was empty and there's a problem, they'll tell you the property isn't insured).

FMM: And how do you find these motivated sellers? How do you market your services?

ES: We work with divorce attorneys and probate attorneys. We keep track of estate sales - usually an indication that someone has died. We've built a really strong network over the years. People know we buy and sell properties, so they refer sellers and buyers to us or give us tips on deals that haven't hit the MLS yet.

What's been interesting about doing this new homebuyer program is that sometimes the owners of these properties become our partners. They've been unsuccessful in selling the property for various reasons - they have the wrong realtor or the property needs a "fluff and buff" but they can't afford to have the work done. Sometimes they don't even know what the problem is or how to fix it. So we come in and fix the problem and then work with the owner to sell the property.

ES: Again, networking. And advertising - we advertise on various real estate Websites. We also know a number of incoming executives who want single family homes. We don't do newspapers - it's too expensive and not enough return for the buck.

ES: None yet. Like I said, it's a new program. But we have five deals in the pipeline for Boston and about ten deals for Miami.

ES: That's a great question. One, we spend a lot of time there and know many people. Our son recently became a real estate agent in Miami, and we also have a partner in Miami who is the top real estate producer in the city -- he has access to developers, so we're getting access to deals and prices that no one else can get.

The Miami market is experiencing dislocation - and what I mean by dislocation is this: you have people who were speculating - for example, buying five condos in a new development and hoping to sell four and keep one - people who wanted a second home, and Europeans wanting to invest.

But the market changed and prices came down. Builders backed out of developments or went bankrupt. People who had contracts didn't lose their money because it was in escrow, and the Europeans didn't want their money back because they wanted to keep it here due to the dollar, so now you have all this money in play.

In short, it's hard to know what to do. It's like the ocean has kicked up all kinds of sand and if you're in the water, you can't see ahead. So there is lots of opportunity right now. It's very exciting.

ES: Don't underestimate the importance of networking. Without our network, we wouldn't be half as successful.

Eileen Schwartz is a fulltime real estate investor and financial planner. The owner of six businesses, she works out of a "real" bricks and mortar office in Newton, Massachusetts. She can be reached by phone at 781-820-8368 or by email at eschwartz@esscoweb.com.