Bubble Bobble we all fall down

Posted On 6:14 AM by Scott Costello | 0 comments

I came across this today and wanted to share. It is about how housing and the economy are intertwined and what is actually happening now that is causing the housing bubble to burst. If you are interested in real estate investing this is a must read.

Bursting Bubble
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BP Rev 1

Posted On 10:40 AM by Scott Costello | 0 comments

I finished my first revision of my Business Plan yesterday. There are some parts I'm not sure of, for instance do I write it if I was a company? I used Costello Home Buyers. Or should I write it in the first person? If anyone out there can lend me some advice that would be great!

I will say it does really make you think about what you are getting yourself into. To write a complete business plan you have to think out the entire process thoroughly. If I had written this before taking the last year to research real estate investing I would have been lost, but I feel I have a pretty good grasp on things and was able to develop a business plan that made sense. I also want to thank Steve Cook for developing a template for investors, it really saved me a lot of time and I have a better business plan for it.

My next objected is to start creating my life goals. To do this I'm going to first figure out what I want out of life and then I can develop the steps I need to get there through Real Estate Investing.
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I forgot it was sunday!

Posted On 10:33 AM by Scott Costello | 0 comments

I usually have baseball games from noon to 5 on sunday (I pitch), but yesterday the games were canceled. I found this out Saturday night so I was like cool I can spend some time with my wife before she goes to work, which I did. As usual on Sundays I went to my mom's house for dinner and she asked me if I had gone to any open houses today because she noticed a lot of them. DOH!! I completely forgot it was Sunday! I had a good opportunity to go look at some open houses in my area to help me learn values. My goal is to go to 100 open houses by the end of the year, I've been to 9 so far this summer (remember I've got baseball every Sunday from 12 to 5 and that's when the open houses are!?!?).

We are in the playoffs for baseball now so if we lose we are out and I can concentrate more on real estate on Sundays then. I'm not playing next year, I love it, but it just takes up to much time.
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Lack of Lazines

Posted On 6:11 AM by Scott Costello | 0 comments

Lack of motivation is one of the hardest things in life to overcome for me and I'm sure a lot of other people. I constantly struggle with getting myself to do things from taking out the garbage to exercising. Hell sometimes I will put a glass in the sink instead of taking that ONE extra step to put it into the dishwasher!?!? Why is that? I wish I had an answer. What I have learned in my 31 years is that laziness is a frame of mind, and can build up over time. If you are lazy about one thing, it seems to act as a reason to be lazy about something else. I kind of equate it to when I was in college, in the beginning of the semester I would force myself to get up to go to class in the morning. I would do so for about half the semester and then one day I would give into temptation and skip the class. From that point on I found it very easy to convince myself to skip that class, and would do so. The motivation to get up in the morning for that class was gone, why??? I don't know, I just know it happened and quickly!

Yesterday was a good day for me in this department until about 10pm. When I got home from my JOB I picked up my puppy, Jack, from my Mom's (she was watching him today because the little guy hasn't been feeling well and needed some one to bring him out Often!).

I took him outside, in my parents fenced in back yard, to play with him for about 20 minutes. After that I convinced myself that running on the elliptical machine was a good idea so I hoped on for about 30 minutes. Broke a sweat! After that I went home and did some work for my brother. Not as much as I would have liked as every time I turn my back on Jack he either is chewing the corner of our furniture, jumping on the kitchen table and grabbing what ever is on there or sitting behind me barking to play with him. If you've ever heard of a keep away dog, he is it (i'll post a video sometime of him playing keep away). He loves to grab something he isn't suppose to have (my cell phone) and run around the table trying to get you to chase him. If you stop chasing him and walk away he follows you until you turn around and chase him again. LOADS OF FUN!!!! After that fun last night I didn't feel like doing any more work so I just watch TV from about 10:30pm to when my wife got home around 11:45. I should have gotten more work done for my brother.

Anyhow I've got to get back to work
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Business Plan - Part 2

Posted On 12:33 PM by Scott Costello | 0 comments

I've continue to work on my business plan and here is the next part that I've gotten to

II. Market Analysis Summary

Costello Home Buyers invests in distressed residential real estate. The main target areas will be those areas that are in high demand by first time home buyers in the Morris County area. These areas are Morristown and Morris Plains to name a few. They have stable resale values yet provide sufficient amount of opportunity. Once the target property is acquired it will be quickly resold to a rehabber or landlord for a $5,000 to $10,000 profit. The wholesale of a property take 30 to 90 days.

1. Market Segmentation

Costello Home Buyers plans to wholesale most of its properties; however, as we progress and our profits allow it, we intend to begin rehabbing to sell for retail as well as holding select properties as rentals for the long-term investments. The cash flow generated from these holdings will be reinvested into the business and pay down the mortgages. With this strategy we believe we can sustain ourselves through real estate down cycles.

2. Market Strategy for Acquisitions

The properties targeted by our company are affordable single-family homes in predominately first time homebuyer neighborhoods located in Morris County. The resale value of the homes ranges from $250,000 to $400,000.

Due to our limited marketing budget, we will focus our efforts in finding motivated sellers in a smaller, more local area at first. We will market to Notice of Defaults Pre-foreclosures (NODs), For sale by owners (FSBO), For Rent By Owners (FRBO), Expired Listings, Free and Clear, Center of influence, Probate, Divorces, Bankruptcy and vacant land in need of repair.

We will obtain these leads by searching public records for Morris County, as well as from our relationships that we’ve created through our networking amongst other Real Estate Investors and professionals. For networking with other investors we have joined a local real estate investors association and attend all their meetings. We have established relationships with investors, who obtain more leads, then voice their interest in buying and we pay them for the properties that we actually purchase. This will help us keep our marketing costs down in the early stages.

C. Market Strategy For Sales

We will market our homes to other investors who are looking to rehab the properties for resale or renting. To find these investors Costello Home Buyers will do the following

* Offer the properties to investors on our buyers list that we have built up through networking.
* Advertise online at Homes.com, Harmonhomes.com,Homesandestates.com,NJMLS.com., GSMLS.com,Activerain.com, Zillow.com, Trulia.com, Realtor.com, Googlebase.com, OurNJHouse.com, ExitGolden.com, Exitrealty.com, Postlets.com
* Advertise in local news papers The Star Ledger and Daily Records
* Present the property at our monthly Real Estate Investors Association meeting.
* Bandit sign out in front of the house

An added bonus to our marketing is that we will identify potential buyers for any future properties we wholesale. This will enable us to target areas/properties that we know our buyers are looking for.

D. Competitive Edge

Our Contracts get accepted even when they are lower than the competition because they have none of the contingencies that are typically associated with real estate contracts. In addition, we offer quick settlements, usually less than 30 days.

III. Implementation Plan

A. Marketing for Purchase

1. Send out Mailers to our distressed home owners ever month
2. After receiving calls from potential sellers we will determine motivation over the phone by asking leading questions and listening to what they have to say.
3. If seller is motivated enough we will setup an appointment to look at the house and evaluate them.
4. Before appointment we will do our due diligence on the prospective property.
5. At meeting with home owner we will determine a repair estimate

As of right now Scott Costello is responsible for marketing and purchasing properties. It is the goal of Costello Home Buyers to follow up on all leads within 24-48 hours.

B. Pre-Purchase Duties

Once we have the property under contract we immediately contact our settlement company to order the title work and schedule a settlement date. During this time we contact our lender and forward all of the necessary information to them so that a file can be opened and the financing process can begin. We will also start to market the property to our buyers list in order in order to find a buyer before we even settle with the seller. If we were to rehab this property this is where we would contact the contractors and set up a scheduled base on our closing date and also call the insurance company to obtain the appropriate insurance policies.

C. The Rehab Process

At current time we do not plan on rehabing any properties, but it will be one of our backup exit strategies in case we are unable to wholesale to another investor. There will be a separate business plan for this situation.
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Business Plan - Part 1

Posted On 11:10 AM by Scott Costello | 0 comments

If anyone has any suggestions I'd be thankful!

A. Company Information

Costello Home Buyers was formed in July 2008 to benefit from distressed property owners in the Morris County. We are a company that specializes in purchasing properties from motivated sellers in order to wholesale them to rehab investors and landlords. Costello Home Buyers is owned and managed by Scott Costello.

B. Management Information

Scott Costello has little to know experience in real estate investing but has spent countless hours research real estate in the Morris County, NJ area. Scott is also half way to getting his PHP (Professional Housing Provider) certificate by attending numerous events sponsored by the Garden State Real Estate Investor’s Association (GSREIA). Scott has worked in the finance field as a software developer that helps manage project budgets. His experience in dealing with people and solving complex problems will contribute to his success as a real estate investor.

C. Company Objective and Purpose

Costello Home Buyers purchases residential real estate in the Morris County, NJ area, specifically Morristown, Cedar Knolls, Whippany, Morris Plains, East Hanover and Parsippany. Our focus is on single family homes that can be acquired and renovated at a cost of 65% or below of the current fair market value. Due to the seller’s circumstances, Costello Home Buyers is able to obtain the desired discounts, which will insure a profitable future. The after repair value (arv) of these properties will range from $250,000 to $425,000. While our main objective is to make a profit, we are also aware of our responsibility to the communities we do business in, and our role in the betterment of these communities.

D. Company Summary

Costello Home Buyers invests in residential real estate by purchasing distressed properties below 70% of fair market value. Our strategy is based solely on making sure the profit is made at the time of purchase and not on speculative appreciation months or years down the road. Our profit for the first year is expected to be low because we are in the early stages of the business cycle. As we gain more experience we expect our profits to increase. As we develop our business we will put in place a solid group of people with defined roles that will ensure our success such as Realtors, settlement attorneys, contractors, and bankers. As with any business we will continually evaluate each member’s role and contributions and make necessary changes.

E. Strengths and Weaknesses

One of the strengths of Costello Home Buyers is we are a small company which will allow us to run efficiently, enabling us to make quick and educated decisions. We are local to the area of our investment properties which gives us a distinct advantage in knowing the market and being able to locate profitable investment properties.

Our weakness is our lack of relationships with industry professionals, thus making initial deals more challenging. As we move forward and gain more experience these relationships will develop and become a strong source for referrals and contribute to our success. Being a small company we will have to pass on certain opportunities and only focus on taking down the most profitable deals. However, we’ve acknowledged our shortcomings, and will address them by outsourcing things such as book keeping to qualified professionals.

F. Goals

Over the course of the next year, our goals are to establish relationships with banks, realtors, accountants and other investors, and to build a marketing campaign that will lead to a steady flow of leads. In our first year we hope to wholesale two to three properties with the understanding that it will be a challenge until we build our relationships.
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Extra Money

Posted On 10:56 AM by Scott Costello | 0 comments

In my effort to keep my family's money (the money made by myself and my wife at our JOB) free from any investing I'll be doing, I took on some part time work. I'll be doing some CAD work for his fire protection company. It basically requires me to draw the floor plans and show where all the extinguishers, stairs, emergency areas, etc... will be. I had never used AutoCad for much of anything, so it's going to be a learning curve but I should be able to figure it out no problem. It'll be paying roughly $20 an hour to start and as I gain more experience I'll make more. Best of all I can do it from my home computer. Now I just have to find the courage to tell my wife this money is for my investing only. Wish me luck! haha.

Update on my business plan, It's coming along. I am about one-third the way finished with my first draft. It's not easy to think of what needs to go into it since I've never done a deal or for that matter ever wrote a business plan before. I post what i've gotten so far in another post.
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What Is My Focus?

Posted On 6:51 AM by Scott Costello | 0 comments

Jared from FlitItBig asked me a good question in his comment to a previous post. He asked "What area are you looking to invest? Buy and hold? Wholesale? Rehab and flip?" This is a very important question to answer before I get started, I mean how can you write an effective business plan if you don't know your exit strategy right?

My focus will be on wholesaling. From my research this is a good entry point into the real estate investing world because it helps build your money reserves. It also has less risk then say rehabbing and landlording. I also like this strategy because at first I can be a birddog in order to gain experience finding deals. Going from birddog to wholesaler shouldn't be that big of a step, just add risk :)
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business plan

Posted On 10:31 AM by Scott Costello | 1 comments

I'm a big fan of the way Steve Cook handles his business. He preaches to always do things on the up and up. I decided to buy his Wholesaling course to help give me direction. I also purchased his Business Plan template with the Secret Sauce to help me develop my business plan. From what I've read so far it is amazing, it orders your thoughts and priorities and I recommend it to anyone wanting to get into the business. If you look around for reviews on this course you will not find one person who did not think it is top notch.

I've always heard that if you are going to run a good business then you NEED to develop a business plan. Like most people think the thought of creating a business plan is over whelming, and I am one of those people. I mean where do you get started and what do you need to include? Hopefully Steve's template will help with this since it is based on real estate investing.
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paralysis by analysis

Posted On 5:20 AM by Scott Costello | 2 comments

In my first post a few days ago I just wanted to get out all the thoughts and questions I had running through my mind. Now I will get down to business. I've been educating myself for over a year now in Real Estate Investing techniques and strategies and have still yet to take action. I know I know enough to get started but I just don't know where to get started. I have all this information in my head, I understood it, yet I am still confused as to what I should do first. My thought was to start to develop a marketing plan and I would go from there, but market to who?

Haha...as you can probably tell, I have a problem making up my mind. That is one skill I have to work on, it drives my wife crazy that I'm so indecisive. I think I need to come up with a business plan in order to give myself direction.

So this is the start of my action, no more paralysis by analysis....stay tuned
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Posted On 10:47 AM by Scott Costello | 0 comments

How can I shield my family's money/assets from my Investing?
Where do I start? Marketing or Finding buyers or Building my team(title companies, lawyers, realtors, etc)...
How much money is it going to take to market?
How am I going to know the repair costs of a house?
Will I be able to find a buyer for a property I acquire?
Will wholesaling work in my higher priced market?
How well do you have to know your target area before you begin?
How big (or small) should your target area be?
When I make a mistake will it destroy me?
If I can't sell what should I do? Rent, Rehab?
Will I be smart enough to creatively pull a deal together?
What should my criteria be for buying a house?
In this down market, is 70% - Repairs - Profit low enough?
How will I come up with the After Repair Value (ARV) if I don't have access to MLS?
Should I get my Realtor License to gain access to the MLS? How much will that cost?
Do I have the drive to keep going when things aren't going well?
Can I convince my wife that I'm doing the best thing for our family?
Can I convince my wife to jump on board and help out?
Where will I get the money from for my marketing? (Money from my JOB will stay in the family)
Where will I find the time to Invest, exercise, work 40 hours a week, sleep and spend time with my wife?
Can I get into trouble putting up bandit signs?
Nobody in my Real Estate Club "seems" to work in my Target Market?
How much profit should I look for in a $300,000 house?
Why does this seem so easy, but so hard at the same time?
What am I afraid of?

Everything about investing will cause me to go outside my comfort zone and it is over whelming to think about at first. I've been reading everything I could get my hands on regarding Real Estate Investing, from Rich Dad Poor Dad to Real Estate Forums such as REIPlace and ReiClub. I started January 2007 after I bought my first condo. The questions above have gone through my mind at different times during my education and I can pretty much give you the "correct" answer to all them. The questions or even the answers are not what is holding me back, it is me and my shy nature.

I've always been one to try new things. Electronics I'm on line the very first day a new technology comes out. When I built my first computer, read a little bit and just bought all the parts I thought I needed and learned as I went. When I graduated college with a business degree I decided I wanted to be a programmer so I bought some books and learned enough to get my first job. One day I came across a website that mentioned how to put a computer in your car, and after about 6 months of learning (had to make sure I didn't blow up my car or fry every circuit) what was needed and saving money to buy the parts I now have a kick ass car computer! When I bought my condo i wanted to learn how to build furniture so I read some forum posts on tools and went and created a window seat and book shelf.

What i've learned from my past experiences is if I keep at it I can accomplish what I want. I don't just jump into it blind I always educate myself in order to ease my mind of some of the questions that flew through my head. I may take my sweet time getting to my goal, but I always get there and this time won't be different!

I love a challenge, Bring it on!
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