Day One          Monday, January 21, 2008

8:00     Garon picked me up at my hotel and we headed to his home office.  We spent the first hour discussing the appointments that he had set up currently, and what other ones we would need to schedule.   He and his realtor, Jill Tate, were sending out around 100 letters a month, but were having a tough time getting responses back.  Garon and I also went over some of the deals that he was currently working and we planned to focus on them sometime today.  Garon’s primary concern was to drive some cash flow into his current business to help with his bills and help compensate Jill as well.  We discussed him focusing on wholesaling and options to help drive business and immediate cash to his budgets.

9:00     Garon’s realtor, Jill Tate, arrived at his home.  Jill was a relatively new realtor (18 months of experience), but was motivated to work with Garon.  She was currently working with about 15 other investors from time to time, but was working primarily with Garon currently.  We worked until 10 by reviewing the Craigslist and other online ads that she was posting to try and sell homes, attract foreclosures, and to find buyers.  I tweaked a few of their ads, and added a couple more to their list.  We then got ready for our first appointment.

10:00   Richard King and Sharon Lepisto with City Equity Funding, LLC (hard money lenders) arrived at Garon’s home and we spoke with them for 30 minutes discussing their lending programs.  We also discussed whether or not that they would fund note pools.  Richard and Sharon seemed a bit distant and had a bunch of questions for us, but as we wrapped up the meeting they seemed cordial.  After we left, Garon explained that Richard had been taken by several new investors and that he was pretty much that way with most people.  We then spent the next hour calling and setting up a few more appointments with a couple mortgage brokers, hard money lenders, title company, and real estate attorney.

12:00   Lunch

1:00     We headed over to Todd Munday, Mortgage Broker with Phoenix Mortgage.  Garon actually hung his loan originators license with Todd, but was not actively working as a loan officer.  We had a great visit with Todd discussing the market and his business.  We then explained that we were looking for a few mortgage bankers who have warehouse line or who might have some pools of nonperforming paper.  Todd was a big help with this and gave us around ten names of colleagues who might have what we were looking for.  We thanked him for his time and left his office. 

2:00     We spent the next hour driving around northern Oklahoma City looking at several desirable areas that Garon wanted to buy or focus his time one.  We drove by one property that he had taken over subject to from one of his previous co-workers.  The property had a repaired value of around $70K and had a mortgage balance of $66K.  The home itself needed around $3K to make it livable with another $10K to make it salable with paint, carpet, and other exterior work.  We discussed what Jill and Garon had been trying to do by trying to rent it out, but unfortunately the home was not getting a lot of action and those that were looking at it were disappearing.  It needed a lot of work and Garon brought up the fact that it might be more beneficial for him to just give the property back to his co-worker.  Based on the numbers, I thought it made sense for this course of action, but he said he would think about it for a while. 

3:00     We then drove by another area where Garon and his business partner, Rick, were building 22 custom built homes and going through the final hurdles to start construction on the lots.  We then headed back to Garon’s home where we focused on trying to help Garon sell 3 properties that he had also build with Rick outside of Dallas.  I structured a couple owner financed notes for them to recoup their investment at a slight profit.  I also helped Garon post the homes on Craigslist in Dallas and Los Angeles in hopes of attracting out of state buyers for the $350K homes.  After this, Garon checked his email and was surprised to see that he had received several emails from the new ads.  Garon answered the emails and then called one of the responses from the marketing letters.  We had originally planned to head out at 4 pm to meet with him, but Chris called to state that he was working late and that we would get together on Tuesday. 

5:00     We spent the last hour discussing what we had gone over that day, along with working with Garon to create some scripts for his PB Next account and tie it into his Craigslist ads and his FFN website.  I asked him to focus on creating some scripts for his ads along with working to create a mass investor email list for him to market to for private investing and private funds.  We also discussed how Garon could utilize some of his funds to lend out via smaller, hard money loans to investors and have his money return a nice rate of return.  Garon was extremely intrigued by this.  We spent the last few minutes completing the Daily Journal.

6:00     Garon dropped me back off at the hotel.

Day Two         Tuesday, January 22, 2008

8:00     Garon picked me up from the hotel and we headed over to his office to prep for the day and to meet with his partner Rick.  Garon explained that Rick was very old fashioned and was pretty set in his ways of borrowing money from banks to make things happen and didn’t want to concern himself with finding other ways to do business.  He also stated that he had worked with Rick for 20+ years in one form or fashion, whether it was securities, gas and oil shares, or real estate development.  Rick showed up around 8:30 and we spent the next hour visiting with him about how he was interested in helping to fund the purchase of some defaulted note pools and self-servicing them through his office or foreclosing out the loans and flipping the homes into owner financed transactions. Rick also spent about 15 minutes discussing some of the people who he was currently suing.  He seemed like a very abrasive, stubborn, and thick headed individual (Garon’s exact words), but he had done well for himself and his investors the last few years.  He was unable to spend anytime with us as he had a meeting with the local city council and judge to discuss his and Garon’s 22 custom built home project. 

10:00   Garon and I headed out and met Jill at Garon’s real estate attorney, Kent.  We visited with him for a few minutes and Garon discussed with him how we were looking for note and REO pools.  Kent was extremely interested and was willing to offer his help to find private funding for them once we found them.  He had some specific questions on how and if we planned to pool funds together and we discussed using self-directed IRA LLC’s and having them partner with a LP amongst the investors.  He liked that idea, and was willing to help us out in any way that he could.  We left his office and headed out to return to Garon’s home office.

11:00   We got a phone call from Vanessa Shadix, Closer with American Guaranty Title, inquiring if Garon was alright.  He had gotten his appointments confused, so we headed straight over to her office.  We had a great visit with her and she volunteered up offering free Hud-1’s along with a reduced price for property reports and free PR’s if we submitted and closed the REO and note pools with her office.  Jill and Garon had both closed with her before so we felt good leaving the office as we headed to lunch.

11:30   Lunch

12:30   We met with Cindy Glenn, Loan Originator with Financial Concepts Mortgage.  Cindy had been in the industry for 15 years and prided herself with service.  She was also an investor and she provided us with what she was looking for along with offering to send out deals to her list of investors to help Garon wholesale deals, or find private financing to take down pools.  We also discussed with her about the opportunity for us to step in and help her close a few more deals with owner financing.  She stated that she was only interested in conventional financing.  Cindy gave us a financing package and prequal forms for Garon’s potential home buyers and we headed back to Garon’s home. 

1:30     We dropped Jill off at her car and agreed to meet up later to visit with Chris (short sale reschedule from the night before).  Once Garon and I arrived back at his place he pulled up a link to a website offering some note pools.  We reviewed them for the next hour and were able to review the due diligence files on line.  We agreed to spend more time tomorrow looking at them.  I spent the next two hours calling mortgage bankers and mortgage brokers to determine if they had any pools that they would be willing to send over to us to bid on them.  I was able to contact 15 offices and left messages with 13 of them.  The other 2 stated that they would review what they had and send us a tape to look at.  Garon was pretty excited to see the results and responses. 

6:00     Garon dropped me back off at the hotel.

Day Three       Wednesday, January 23, 2008

8:00     Garon picked me up at my hotel.  We headed directly to his home office and started to review the previous day’s daily journal.  We also reviewed the list of foreclosure and short sale properties that Jill had pulled off of the MLS.  We began to use Prop Stream to review each listing to find out sales data, note balance, and a rough estimate of value.  We discussed how we would offer initial Letters of Intent at a rough 65% of value to draw attention to the offers and to help avoid Jill having to fill out 12+ contracts.  We also reviewed the note pools that Garon had emailed him from a site called Beowolf. 

We used Prop Stream to help determine values and whether or not to submit it to SMI Funding for purchase. 

10:00   We discussed scripting for Garon to start calling mortgage bankers and I took a few minutes to write up a script for him to use and we started calling mortgage bankers.  We worked straight through lunch up until 5:00 pm calling mortgage bankers.  We contacted and either spoke with the secondary marketing manager or the manager in charge of the warehouse line directly on 15 of the phone calls (a 25% hit rate).  We left messages on the remaining 45 and noted our spreadsheet so that we could follow back up with them within the next few days.  We were also fortunate to have five of the fifteen offers to send us pools ranging from one note, up to twenty.  We clarified that if we did not receive anything from them by noon the next day that we would call back to discuss.  We were also fortunate to talk with James Monroe, another investor looking at buying notes, but he was primarily looking for second liens.  He stated that he had a few first liens to send us and we altered our script to focus on seconds as well that we could send directly to him for a fee to Garon.

While we were doing this, Garon joined the local Oklahoma City Real Estate Club and sent out a mass email, along with posting an add looking for other investors to help fund, purchase, and wholesale note and REO pools.  We discussed how he should collect this info and store it to keep his private lenders available. 

We worked straight through lunch and we called bankers from Oklahoma, Arizona, Utah, Maryland, Texas, and some from California.  Garon was excited to see the progress, especially when we received one note pool consisting of four Houston, Texas notes and one in Cora Gables, Florida.  We discussed what the pricing could consist of and how he could be making anywhere from 1-3 points based on the funding amount.  We also discussed some of his options for cherry picking specific pools for notes that he wanted to keep for his own personal portfolio.  He liked this idea and we discussed him focusing on his other list that we pulled from the Office of Consumer Credit from the state offices of Oklahoma and how he could call 10-20 per day to land deals.  We worked up until 5 pm making calls and contacting brokers.

5:00     Wrapped up the day by completing the Daily Journal and then Garon dropped me off at my hotel.

Day Four         Thursday, January 24, 2008

8:00     Garon picked me up at my hotel.  We headed over to his 21^st street home to meet a contractor who would give him a bid on the property to bring it up to rentable condition.  Andy had been rehabbing homes for several years and he had some good ideas, but we stressed that we weren’t looking for a complete rehab, just some simple paint and flooring.  We were there for just a few minutes and Andy stated that he would have a bid and list of materials by Friday.  We thanked him and headed back to Garon’s home office.

9:00     We arrived at his home with Jill Tate arriving just a few minutes after us.  She had received four responses to our letters of intent and so we began by reviewing those properties.  Jill called and set up two appointments for us to stop by two of the properties for later that afternoon.  I then worked with her for a few minutes and helped her write up the contract with the appropriate language.  We discussed the pricing of the deal and what and how he should price short sales initially along with REO properties.  I stated that they should submit the LOI to draw interest, and then review the properties before submitting a contract.  Jill stated that two of the properties were in desirable areas, but the other two were in low income areas and probably didn’t fit what Garon was trying to do.  We discussed the merits of each and chose to go look at two of them on his side of town after lunch.

11:00   Lunch

12:00   Jill took off to meet a potential renter on the 21^st street property while Garon and I drove to review a short sale on Essex.  The property was in need of some definite foundation repair, along with some carpet and paint.  We discussed the property’s condition until Jill arrived at 12:30 and then we took off to look at two other preforeclosure that Garon had come across nearby.  One of these was a total rehab and the other was recently placed under contract.  We were able to get in contact with one of the realtors who gave us the code to enter.  I suggested that Garon should try to negotiate a short sale or offer a very low price as the home had been on the market for an extended period of time already due the amount of rehab needed.  After reviewing the property, we headed back home.

2:00     We arrived back home and I began to work on a 5-step marketing and follow up campaign for Garon and Jill.  I stressed that they keep making offers on ugly, pre-foreclosures, REO’s, and keep calling mortgage bankers.   I went through each phase with them both and they both agreed that it was very feasible.  Jill had to leave us around 2:30, so after she left, I focused on calling a few more mortgage bankers with Garon.  I was fortunate to have three emails from bankers who had individual notes that they were looking to sell, along with having one of them send me a REO pool that they were offering at 65%.  I talked with Garon about how he could price these or broker all of them out.  We sent a blank tape back to all of them for them to complete and I stated that we should send them into SMI for pricing on Friday or Monday.  He agreed.

4:00     We wrapped up the day by going over the final daily journal.  I spent some time recovering his concerns on how to price a note pool and just suggested that he send them into SMI at first and have Jayme Kahla help with the pricing of them.  We also discussed him utilizing some of his private money available to him or hard money by attending some of the local REI clubs to find local hard money lenders.  He understood the pricing details of hard money and I stressed that once he found a good deal, that there would be lenders looking to lend him the money privately. 

5:00     Dropped off at airport.

 Market Analysis - Oklahoma City, OK

            Oklahoma City is a growing town whose primary source of income and industry has to deal with the gas and oil business.  The city is also home to several major call centers for Dell Computer and H&R Block.  The city has grown in width wise as many of the surrounding areas were growing in size as people were moving out of the city to have more space.  The housing market in OKC was stable as the city had experienced a slow rate of appreciation the past five years of around two to three percent annually.  The county tax accessor was increasing values at a flat rate of five percent annually, so many of the appraiser’s values were ballooned over the market.  We found that homes were remaining on the market for an average of 60-90 days, but in some areas, such as Nichols Hill, and Edmond, homes had very little holding periods.  The medium price range for homes were in the $100-$125,000 range.  Many of the homes that we found were older homes built in the 1970’s, with little updating.  We found that there were many local smaller banks that were handling the majority of the financing business and were resistant to selling off their notes or negotiating short sales.  Upon review, we did find a few REO’s, but the inventory was dramatically lower when compared to areas like Dallas or Houston.  We did find that there was more knowledge amongst the real estate community embracing owner financing, lease options, and contracts for deeds.