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Health & Fitness

My Interview With Real Estate Investor John, Part I

Part one of my interview with successful local real estate investor who invests in Roswell, Alpharetta and East Cobb.

Recently, I had the fun opportunity to speak with John, a successful local (and young) real estate investor buying in Cobb, Alpharetta and Roswell, who continues his success, despite the current economic situation.

Among other things, we talked about how he got started, his best and worst investments, his thoughts on the current real estate market and its future. John also offers advice for others who would like to begin investing in real estate.

I ended up transcribing the whole interview, instead of the highlights, because John has a lot of really interesting stuff to say and didn’t want to take away from that. The interview is super long so I will break it up into 3 different sections.
By the way, this is not a sales call – it is just training on what investor John does and how he does it.

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PART I: How to Find Deals and John’s Best Investment
Joanne: I’m here with John, an investor that actually just bought a home with us. John, you were really able to move quickly on that deal and you recognized very fast that it was a deal. You’ve got a full-time job. On the side, you own some other businesses in other locations. You did this in your spare time, right?

John: Yes, in a sense.

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Joanne: So, just give me a feel, John, for some of the activity you’ve had over the past few years, that way we can get a feel for your experience - buying and selling. How many homes have you been looking at online? How many do you go see?

John: I look at very few houses. Usually when the deals come to me, they’re really a home run already. I’d say I look at less than 20 houses a year, but I purchase at least 30 – 40 percent of them. So, I’m buying one house out of every three I look at, but the deals that are on my tables – I want to make sure I’m not wasting anyone’s time. I do a lot of research before I even go look at it. I do see exterior pictures. I want the broker to give me a very realistic view on what the market is. Obviously, if you work with a broker that is not very truthful, you keep moving until you get a broker that can be truthful with how she sees things. So, the activities they just come to my desk and I review them, and I drive to go see it, but I see very few houses.

Joanne: So people bring them to you?

John: Yes

Joanne: That is awesome. So, in this economy, one of our clients asks, why buy right now, when the home you buy might sit there for a while before making any money? I guess they’re thinking of selling it again.

John: Why buy? I’ve been here since I was nine years old and I’ve never seen the economy this bad. Last time I checked with the stock market, you could see the rates – savings rate – we have never seen it crash like this. So, in order to hedge against inflation, you really have to look at what your money’s doing, whether it’s in the bank or real estate or the stock market. The stock market is actually giving a negative return value in the last ten years. So, when you are faced with a property that is a tremendous value, you can see that. It’s going to save you from bad investments on the side. So, when I’m buying in this economy, I’m hedging against inflation. Also, I’m looking at a bigger upside for all my money vs. in the bank or in savings or in mutual funds. That’s why I’m buying right now.

Joanne: And what has been your best investment that you’ve made?

John: Real estate wise? You’re talking about dollars vs. returns? There are a lot of good investments I’ve made…

Joanne: In terms of returns.

John: In terms of returns, I bought a house that was about to be taken up by the court because the real estate tax wasn’t paid on it. I picked up the house for $160,000. The house was appraised at $500,000 – four-sided brick, six bedrooms, and that was the biggest one. The second biggest one has to be a million dollar house. I bought it for $670,000 and that was immaculate…I just can’t imagine. Because the bank was trying to get out of this loan, they were willing to leave a lot of money on the table after they foreclosed on the builder. So, these are different avenues I’ve taken because I just got lucky on it. Not many people find that…they were just lucky buys.

Joanne: And what years were those?

John: All within the last two years.

Joanne: And what were they listed for?

John: They were not listed because they were bank foreclosures, so I went through the bank…the bank needed help to take it off their books. Now most investors won’t hear nice deals like this. They usually package it as a couple million dollars and turn it over into a bunch of investors. But I just got lucky…that was in East Cobb. I love East Cobb.

Joanne: Wow, who brought that to you?

John: Actually, we were just looking around in the bank, while I was at the bank, making a deposit, speaking to the loan officer. They just wanted it off their books. They did not want to hold on to any kind of loans. I believe that was also during a time when the government was tightening banking requirements. So, they went through a stress test, so in order to stay afloat with financial help from the federal government, they had to get certain bad loans off their books in order to receive help. So, they just dumped it.

Joanne: Great place at the right time! Go into your bank –right?

John: Well, I tried doing that too, but they just laughed at me. I know there are a lot of people rejected for loans to get out of trouble, even when their house is very valuable. I went to banks and asked the banker if they reject some of these loans, may I review it as a secondary bank, because I have enough money to lend people, in order to make sure – not only do I benefit, but the homeowner gets through the rough time they are in right now. A lot of people have been rejected of loans lately because of the timing of the financial situations that we are facing.

Joanne: Are you doing a lot of seller financing right now?

John: I don’t sell. I’ve never sold.

(Stay tuned for parts II and III)

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