Cottonwood Arizona Real Estate Investment Training
Northern Arizona Real Estate Investment Coaching
Prior to my arrival I had several conference calls with Cindy to see where she was as an investor. We outlined the homework that she needed to complete prior to my arrival. She seemed very excited, but she seemed to have a hard time grasping and retaining some of the concepts that we discussed. I looked forward to helping her really get off and running and helping to teach her a ton of information to help her out with her investment career. I was excited to here from her the Saturday before my arrival that she had come across a development east of Phoenix where the builder had walked away from 37 custom built homes all in different phases of construction. We chose to meet Sunday evening and take a look at them with her friend who had informed her of the properties.
Day One Monday, December 3, 2007
8:00 Cindy picked me up at the hotel. We discussed the properties that we had visited the night before along with going over the week at hand and the number of appointments that she had initially set up. We headed out to the County Recorders Office in YavapaiCounty. We met with Pete Persell who informed us that the county updated their records at least once a week and that Cindy would need a user ID and password to get on the website. He helped us get that straightened out and I took the next few minutes to discuss how she could utilize the website to help her track down owners, lis pendense filings, and notice of trustee sales. We discussed how she could market to these individuals and potentially pick up some great deals.
9:30 We met with real estate agent, Ken Robertson. He showed up about 30 minutes late. Ken has been an agent for over seven years now and had been an investor for the past five. He seemed interested in what we were trying to accomplish. He seemed interested in pitching the sale of some raw land that he had just purchased. When we discussed him pulling a list of REO’s or short sales listed on the MLS, he didn’t seem that interested in assisting us. We spoke about investing strategies and inquired about a local networking club, and he had to ask what that was. We left the meeting and headed to lunch.
12:00 We made a few phone calls to a couple potential hard money/private lenders to set up appointments for later in the week. We also discussed what Cindy should be looking to do in the current marketplace with options and assignments and how we could structure those deals for her to make some quick cash. We also discussed Ken and if she should work with him some more. I suggested that we discuss that later on after visiting with the two other realtors.
1:00 We met with real estate agent, Denise Lerette, with Professional Realty Group. Wow, what a difference. Denise was excited to hear what we were looking to accomplish and was willing to immediately pull a list of potential properties that we could look at and make offers on. She pulled a total of around 10 properties that were currently listed as short sales and foreclosures on the MLS, and she also helped us pull up the underlying financing that was reflected on each property as well. She also pulled CMA’s for each property and promised to fax us a list of the local REO’s once she got back from another appointment at 2:00. We thanked her for her time and left the office excited.
2:00 We headed back to Cindy’s home and began to work on marketing and mailing letters to the list of lis pendense properties that we had pulled at the county recorders office that morning. I discussed with Cindy some of the marketing that she was currently doing to market for her real estate and we also talked about what an asset that Denise seemed to be. We then headed out to the CountyCourthouse in Prescott to track down a complete list of foreclosures for the county and to try and catch the last part of the day’s foreclosure auction.
3:00 We arrived at the CountyCourthouse and visited briefly with the county clerks office. Unfortunately, we had just missed the last part of the day’s foreclosure auction, but were able to track down the posting area that was required for foreclosures to take place. We jotted down a list of the local trustees handling the foreclosure procedures here in the county and discussed how we could pull up the list from the trustee’s individual websites. After this we headed back to Cindy’s house.
4:00 We arrived back at Cindy’s home and began to work on pulling a list of foreclosures from several of the trustee’s websites. We were able to identify two lists that would allow us to pull the list without subscribing and paying for the list. Cindy stated that she would prefer not having to pay for lists since her funds were a little tight, so I told her to just print the two lists and we would work them. Cindy seemed amazed that I could pull these lists and she informed me that she was pretty intimidated by the computer. I took the time to sit down wither her and to have her save the websites under her favorites to make it easier on her to find them later on. I also spoke with her about posting some free online ads through Craigslist to help her build her buyers list of investors so that she could easily assign her deals to. We spent the next 45 minutes having her post several ads that I helped her write up and walk her through the process. I had to explain what assigning and wholesaling was to her and how she could accomplish this. We went over it several times and she seemed to finally grasp it.
5:00 Cindy was pretty worn out and so we decided to call it a day and had her fill out the Daily Journal and she then dropped me back off at the hotel.
Day Two Tuesday, December 4, 2007
8:30 Cindy picked me up at the hotel and we headed back to her house to work on getting out the mailers to the list of upcoming foreclosures within her county. I showed her the yellow letter and how it was an effective tool to have motivated home owners contacts her. We worked all morning to get 100 of the letters printed, addressed, and stamped and ready to be dropped off.
11:00 We left Cindy’s house to meet realtor, Michael Martin, with Brokers Association Realty. Michael had come highly recommended from one of Cindy’s loan officer contacts. Michael had been a realtor for over 15 years and had worked with just a few investors. He was interested in what we were looking to accomplish and he had a ton of questions for us to help him identify potential deals for us. He also promised to look into pulling a list of REO’s for us locally as he wasn’t initially sure how he could sort the MLS for them. He seemed like a pretty good contact, but we decided to wait and see if hew would get back to us with the promised list.
12:00 Lunch While at lunch, I was able to get in contact with a seller who had placed a bandit sign advertising homes $200,000 below appraised value. Guy Cantrell seemed interested in talking about offering owner or creative financing to help move his 5 $1 million dollar plus homes and offered to meet us the following day. He was also able to shed a bit of light on the abandoned subdivision that was next to his homes. I thanked him for the info and promised to call him before we arrived at the homes that he was planning on showing us.
1:00 We headed out to meet with Phyllis McDaniel, Loan Officer with National Bank. Phyllis was extremely nice and interested in helping us, but was limited in her investor and rehab loans. She did recommend to us two private lenders in the area that she had worked with in the past. She had previously worked with a mortgage broker prior to joining the bank, so we were able to discuss some of the things that we were looking for. Phyllis mentioned that the bank might have several REO’s and note pools for sale. That definitely peaked my interest and I asked her if she had the contact name for the individual in the secondary marketing and REO department that we could contact. She stated that she had seen it some where and would dig it up for us. We thanked her for her time and headed out to meet our next appointment.
2:00 Me arrived at Yavapai Title and met with Tammy Burgess. Tammy stated that she had worked with a ton of investors and was very familiar with simultaneous closes, lease options, and subject to deals. She recognized Cindy from a previous encounter and the two discussed families. Tammy stated that she had some items that she would get to Cindy in the mail and was excited to work with Cindy to get her business. We thanked her for her time and looked forward to sending her some business. We headed back to Cindy’s to finish up the afternoon.
3:00 We arrived back at Cindy’s and I had Cindy check her email. She was surprised to find two replies’s to her Handyman Special ad and I explained that she needed to hold onto those contacts so that she could contact them once we had a few accepted offers to hopefully assign them to. I had to re-explain to her what that was again and how that would work out with her agent, the title company, and how she would make some money. She seemed pretty exhausted, so I worked with her to help organize her office, and clean up her computer so that it was bit more user friendly (erasing the thousands of junk mails that was filling up her email, and removing some of the crap from it that kept popping up). We also discussed that she needed to start looking at her email on a daily basis since the realtors would be sending her potential deals and that people would be responding to her online ads. We wrapped up the day with Cindy filling out the daily journal and us discussing what we were going to be working on the following day.
5:00 Dropped back off at the hotel.
Day Three Wednesday, December 5, 2007
8:30 Cindy picked me up at the hotel. We headed out to Gold Canyon, Arizona to meet up with Guy Cantrell, builder, and to get a better look and potentially a few numbers on the abandoned 37 home subdivision. We arrived at Guy’s homes first, but he called to tell us that he was running an hour behind, so we drove the mile from one of his homes to the Mountain Whisper development. We messed around trying to get the gate to open, but to no avail so I climbed the fence and started walking the streets to identify the street names and to write down any realtor signs that I could find. I was able to walk the neighborhood and identify 12 homes that were very near completion, but another dozen that were somewhere between 25-50% completed (ranging from just slabs, to completed exteriors and stud interiors). After spending around 30 minutes inspecting the sight, I climbed back over the fence and we headed back over to meet Guy. Cindy seemed pretty amazed or startled that I would do such a thing, but with no one around, and no obvious signs, it seemed like the right thing to do.
11:00 Guy showed up at his Bela Via Villa home and gave us a thorough tour of the home. He stated that he was the builder on these homes and looking to get rid of all four of them to move on to the next project. He had dropped all of them a minimum of $200K with one of them being reduced by $250K to hopefully get them sold quickly. He stated that he had run into problems with end users not being able to qualify for them and that he had a few borrower loans die. He stated that he was into them for pretty close to what he was selling them for (which I could detect was not 100% accurate), but he did agree to review a couple of scenarios offering owner financing to help them move quickly. We thanked him for showing his homes to us (they were very well built and he had spared no feature) and we headed back to Cottonwood.
1:00 After lunch, I was excited to get a call back from Pat Dennis, the original sales agent on the Mountain Whisper development. Pat informed me that the developer had greatly under bid the project and had walked away from it. She stated that all 37 homes had been sold to individuals with individual construction loans and that the loans had not been paid on in over a year. She also stated that First Magnus was originally willing to work with the home owners, but had filed bankruptcy further complicating the whole situation. She also stated that the builder had also walked away from another development in downtown Phoenix. Pat stated that she was still in constant contact with the home owners and that they just wanted to walk away from such a nightmare. She also stated that she was also still in contact with the original architect and that she could have him find the original plans for each home. She stated that she would know more about what the attorney’s for First Magnus would allow either later on Wednesday or on Thursday and that she would notify us as soon as she heard something.
2:00 After our phone call with Pat, I began to show Cindy how she could identify home owners and property addresses by utilizing the CountyRecorders office of the different counties. We were able to pull all 37 owners names, addresses, and initial sales prices for each home in Mountain Whisper. Each home had sold for at least $500K and up to $850K. Two owners had been able to deed the property back to First Magnus in lieu of foreclosure before First Magnus filed bankruptcy. I showed her how to track this information and what Deeds and Deeds of Trust meant along with how to read the property information sheets that the county had recorded. It was tedious work, but she was excited to see something like this, and how to do the same thing for any other problem or ugly properties that she might come across. After doing this we decided to work on her marketing and phone conversations for a while.
3:00 I sat down and wrote out several scripts for Cindy to work on and utilize with the responses that she would be getting from her yellow letter campaign. She had a lot of questions which was good to see, and we spent a good 90 minutes working on her answers, scenarios, questions to ask, and how to respond to callers questions. I told her not to worry about messing up as everyone has done that, but to just follow the property information sheet for the most part and to read straight from the script for the first few times. She seemed to grasp this quite well and took a lot of notes during our role playing. We wrapped this up and headed out to meet with one of her scheduled appointments.
4:30 We arrived at Majestic Mountain Mortgage and met with loan officer, Ellen Sandeval. Ellen was a former school teacher who had moved into the finance industry over seven years ago and ran the Cottonwood branch. She stated that she worked with a lot of investors and was familiar with their mindset and requirements. She stated that she would be glad to help Cindy prequal any end users that she might come across. She also stated that she was very familiar with owner financing and had worked with Yavapai Title and Tami Burgess to help close several deals that way. She also discussed several small lenders that had just closed their doors and that the market in town was a wonderful time to buy. She also stated that she would be glad to work with Cindy to help discuss some of her deals with some of her investors to help her assign them and close .We left the meeting with Ellen and thanked her for her time. I discussed with Cindy that Ellen would be a phenomenal team member and someone that she might want to take to lunch after our visit. We headed back to Cindy’s.
5:30 We wrapped up the day with Cindy filling out the Daily Journal and her dropping me off at the hotel. We both agreed to be on the 6:30 conference call with Bob later that evening.
Day Four Thursday, December 6, 2007
8:30 The day started out with Cindy picking me up at the hotel. We headed out to eat breakfast together and to discuss the previous couple of days. I had asked Cindy to review what we had discussed and worked on and to write down any questions that she might have for me to go back over them with her. We discussed what we would focus on today and what time we should wrap up the day as well, so that I could make it to the airport on time.
10:00 We arrived back at Cindy’s house and immediately began to work on her weekly, bi-weekly, and monthly marketing calendar and action plan. I went over what she should be doing during the week and gave her some good online resources and helped her to subscribe to Ron LeGrand’s newsletter and REIclub.com. We called several of the Phoenix area RE clubs and were able to pinpoint one that she should make the drive to attend monthly. We also reviewed the short sales that Denise Lerette had sent us earlier and I showed her how to price her offers at 60% of the listed price. I told her to expect them to be initially denied or countered, but for her to stick to her guns and I explained why she should stick to her numbers. We emailed Denise Cindy’s offers and explained what we were submitting at along with how we wanted the contracts to read (Cindy Gunnarson and/or assigns) and what type of earnest money and option period we would be looking for.
12:00 At the same time that we were sending the offers out to Denise, Michael Martin called to visit with us some more. He had some more questions and I took the time to go back over what we were trying to do. He stated that he just wanted to be clear on his part and that he had a list of around 10 REO properties and foreclosures in the Cottonwood and Sedona areas that he would email us to review as well. Cindy was excited to have the potential deals coming in. She again asked me to explain how everyone was going to make money on the assignments and if the realtors would be mad for her making such low ball offers. I tried to explain the option and assignments again, but I really feel that she wasn’t grasping it, even after I wrote out the process, drew pictures, and explained how each party was involved and why the banks would start to consider such low offers. She seemed excited again after my explanation, but I’m not 100% sure.
1:00 I had Cindy sign back onto Craigslist and had her repost her ads, but I could tell that she wasn’t comfortable with the process. I wrote down the process and saved the ads that she would be posting on a separate word document to help guide her and make it easier on her. I also recommended that she might want to look into taking a night class on computers to help her feel that much more comfortable. She liked that idea. We also discussed what she should study to help her out and I recommended that she finish up with the RL strategy and Paper Power manuals along with reading Ron LeGrand’s “How to be a quick turn real estate millionaire,’ and how they would help her with her business. She also stated that she had purchased several hundred lists of private note holders in the area. I jumped on this and helped her write a simple note marketing letter that she could mail out to these note holders and how she could then submit these to SMI funding for quick cash as well. She was extremely excited about this prospect and would start mailing them out on Friday.
3:00 We headed out from Cottonwood to meet with Cheryl Meyers in Phoenix for Cindy’s final interview with a loan officer. We arrived at the restaurant at 4:00 and had a wonderful visit. Cindy did an excellent job asking Cheryl the interview questions and digging more into her responses. Cindy really enjoyed visiting with Cheryl and was also excited to here that Cheryl had several local investors looking for multiple deals that they would purchase from Cindy. Cheryl also discussed with Cindy what kind of deals that she was looking for and was willing to help work with her borderline credit individuals to help Cindy sell some of her properties with simultaneous closings. We left the meeting with Cheryl and we wrapped up the day with Cindy filling out the final Daily Journal and the Mentor Evaluation.
5:30 Cindy dropped me off at the airport.
Market Analysis-Cottonwood, Arizona
Cottonwood, Arizona is a growing town of just over 10,000. The town was originally a mining town that has seen a tremendous amount of growth in the last five years along with Sedona and Prescott as more and more families and individuals are moving out of Phoenix. It is about 90 miles north of Phoenix and just off of IH 17 that runs from Phoenix to Flagstaff. The housing market has also taken a bit of hit like its neighbor to the south with the increased amount of foreclosures and defaulted loans increasing the average days on market for homes ranging from six to nine months. The median home price in Cottonwood for a 3/2 of around 1500 sq ft is at $300,000. There are still quite a few new homes and smaller commercial developments that are still being built, but YavapaiCounty is still home to over 1 out 100 homes going to foreclosures. The realtors and loan officers that we talked with stated that over 30% of the counterparts had or were leaving the business. They also stated that many of the banks were dropping the listing prices on many homes recently by as much as 15-20% to entice buyers and investors. The older area of the town, Old Cottonwood, is undergoing quite a bit of a demographic and regentrification change as the older homes were drawing quite a bit of interest as the schools in that area had just recently seen upgraded standings and that there were quite a few bargains. Over all, I see Cottonwood as being very similar to the surrounding markets of Phoenix with high foreclosure and default rates and that owner financing and buying and holding properties for a period of 2-5 years would work quite well for investors as long as they purchased these homes at the right price.