|
Most first-time real estate investors are happy if they close one or two deals when starting out. Paul closed ten deals his first year - and is thinking of hanging up his accountant hat! He explains how coaching helped him achieve his success.
ForeclosuresMass Monthly: Paul, let's talk about your first deal. How did you find it and what were your challenges?
PD: My first deal was a lease option for a foreclosure. The people who owned the property had been transferred out of state and were holding two mortgages - one being a bridge loan - and couldn't manage both of them, so they let the house in Massachusetts go into foreclosure. I found the property via a foreclosure list but it had also been put on the market by a Realtor(r).
My biggest challenge was knocking on the door! I was very nervous - I didn't know these people, and I was very worried about being beaten up or shouted at. When the owners answered the door, I was very respectful and after introducing myself said something like, "I'm here to see if I can help you. I'll need just ten minutes of your time," and presented my business card. I tried to sympathize with the owners without looking phony.
We ended up doing a "sandwich" lease-option. I have a lease-option on the property and sandwiched a renter into the home at a higher rate. I put the deal together in two weeks and made $12,500 in non-refundable option considerations. If the renter decides to exercise his option, I will make $22K on the back end.
FMM: How did you know this was a good deal?
PD: This is what you learn when you work with Jim Gage. Through the program, you get all the information you need about the real estate investing process. You don't go into your first deal blind. And, Gage actually coaches you on how to do door knocking, which questions to ask and the negotiation process.
So, when I knocked on this particular door, I already had scenarios lined up. I approached the encounter from the perspective that I was there to help them save their home. Maybe I could negotiate forbearance with the bank because they had had a slight hiccup in their payment history. If that wasn't the case, I knew I would suggest a lease option, then a short sale, and then legal counsel and bankruptcy, depending on their situation.
FMM: So it sounds like you were going in with the idea that you were helping these homeowners, not to simply purchase a property.
PD: Correct. I wanted to do what was best for them, not what was best for me. Once we started talking, I learned they weren't that far behind in payments. I knew I could take the option consideration money and cure their arrearages with the bank. It was a win-win for everyone.
FMM: How did you end up doing nine more deals?
PD: Gage teaches three models of what he calls "leverage investing" - short sales, lease options and probate investing. I chose lease options with foreclosures. I set a goal to close one deal a month for the coming year. My objective was to make enough income to replace my fulltime income and then some.
From July 2007 to July 2008, I closed ten deals - two short of my goal, but that's ok. I made enough income that I can now seriously consider going part-time - or even no time! - with the accounting. I could not even imagine this success a year ago. It's been amazing!
FMM: Did you know anything about real estate before you started the coaching program?
PD: I knew the logistics of real estate due to being an accountant, and I knew about the concept of "no money down," but I had no clue how to apply anything. Before I met Jim, I had been attending REIA meetings and investigating real estate gurus and their programs. However, although many of them offer real estate programs, they don't actually mentor you - and they want thousands of dollars.
I found Jim's Turning the Key presentation refreshing because he didn't have a bunch of products to sell at the back of the room.
When I initially bought the one-year coaching program from him, I have to admit, I was quite skeptical of the whole thing. And, I didn't make regular time to pursue real estate investing until I closed my first deal - then I made the time!
FMM: What are your future goals?
PD: I want to increase the number of deals by 50% - or 15 deals for the next year. I keep myself motivated by watching the nightly news and telling myself that my accountant income won't be enough to cover cost-of-living increases.
FMM: Do you have advice for people who haven't completed their first deal?
PD: It's really important you apply what you learn and then take action. One guy I know spent $25K in real estate educational programs and still hasn't done a deal. It's also very important that you mentor with someone who is active in the industry - by active, I mean, actually buying and selling. You want this person to know what you're facing and offer you advice on how to overcome any challenges you encounter.
Paul Deltorio is an accountant and real estate investor based in Palmer, Massachusetts. He can be reached by phone at 508-841-4061.
Copyright © 2003-2009 ForeclosuresMass