REO's in the Low Desert?

[desertd]

Hi Tony!

I just finished your book. Hands down, far and away the best book ever written regarding real estate! I'm just getting started in the real estate investment business. Would you advise now in the middle of 2012 to stay the course and continue to pursue REO's in the low desert of California? Or has the business now shifted away from this REO opportunity?

Thank you, Michael
La Quinta, CA

[Tony Alvarez]

Hi Michael,

The business is ALWAYS “shifting,” thank Goodness! If not we would all soon be bored to hell! ;-)
How’s it going?

First off I NEVER give advice; attorneys, CPA’S and Doctors do, but I NEVER! I MERELY SUGGEST. ;-)

So, with that said let us continue… So the short answer is the REO inventory presently available to us through the MLS has diminished quite a bit. Does that mean it will stay that way forever? I don’t think so, after the presidential election it may change a bit to our favor.

As far as whether you should saddle up and ride into the sunset or just another area of the business in the same target market or even consider moving geographically- well, that’s just another issue altogether.

Believe it or not the question you pose is a “loaded” question, meaning it’s not necessarily easy to answer. Basically I could say yes the REO business (as it was last year or 2 years ago) is “presently” different, so move on to other things. But then, even though I would be correct and accurate for this moment in time- I would also NOT be giving you a complete response.

Successful business strategies, like anything in this life, are just not that simple and require more analysis.

For example, the BIG question that begs YOUR response FIRST is – what do you want to accomplish in this business and why? Are you in this real estate game just to chase deals only pursuing the most popular method of acquisition at a time or are you in it to build a long term business that will carry you financially for the rest of your life? Not to say that deal chasers are ALWAYS only in for the short term, I’ve known many that have decided to spend their whole careers just chasing deals and many move from their local neighborhood to a different city and sometimes even out of state in pursuit of “the deal”; always looking for that elusive “NEW CHEESE.” But the mindset of a long term player is typically more along the lines of analyzing the changes in the market and developing strategies to consistently morph to the ever-changing market demands. Unlike the deal chaser who sees things much like stop & go, stop & go, stop & go traffic…the long term investor many times starts out like the deal chaser (speculator) but quickly matures to riding the road more like you would on the freeway, with cruise control.
If you’re in this business for the long haul- ALWAYS have more than one acquisition strategy as well as exit strategy working simultaneously, ALWAYS!

Although 90% or better of all my purchases have been bought while working with agents that specialize in selling REOs, all of my properties have NOT been REO or bank owned. As I mentioned in the book, those agents are the go-to people for ALL distress real-estate and situations in their market, like divorces, probates, bankruptcies and alike. However, our business is full of distressed and desperate sellers and the methods to find them are limited only by YOUR creativity and effort. So the question is NOT whether you should move on to look for deals elsewhere just because the REO market slows or speeds up or does whatever is just too reactive. The question is why have you not developed more than one systematic method of locating & acquiring deals already? And why are you just looking at giving up on REOs because the supply has changed temporarily? If everyone out there thinks like you there should be less people to compete with soon making the ability to land a deal much easier. Not to mention the access to otherwise tough to access REO agents all the more available and amenable to meeting and working with you – either now or in the near future. This is an opportunity to TUNE UP!

I hope you get my meaning.
Best,
TA.

BTW - I will be speaking in Desert Hot Springs or Indio or something this month- call Candice and find out where and COME ON DOWN! I will be discussing where we are getting our deals and our exit strategies as well as analyzing your market and comparing it to mine.- see you there…

[candicep]

Hi Michael,

Tony will be speaking in La Quinta on September 11th at the CVREIA. The meeting begins at 6:30PM & ends at 9:30PM. For more information, go to www.meetup.com/cvreia/

If you have any questions, please feel free to email me at [e-mail]

[Michael]

Thank you Tony for your honest and straight forward response! You're Number One for this reason! :-) See you in La Quinta!