I may have been living under a rock, but the idea of writing an essay to win a home is a new one to me. And apparently, luck has nothing to do with it.This practice, involving one essay, one entry fee (normally less than $150) and a tenacious attitude has been around since our ancestors in New England have had a need to disperse property. Two modern–day examples:In 2004, Claudia Johnsen, a 79-year-old resident of Alexandria, Va., offered to give away several plots of land and pre-existing homes in Virginia to essay contest winners. The prizes? Two condominiums in Alexandria, a waterfront strip in Stafford County, a vacation house near Hot Springs, Va., and one-third interest in a Temple Hills apartment complex.
One day, while watching Oprah, Johnsen witnessed a guest telling a story quite similar to hers, except the guest had profited from selling an inn. She thought it was a fascinating idea, and contacted Oprah's guest. She bought the contest rules for $750 and after making a few small changes to the policy, she organized her own online raffle.
Contestants would have to submit a $100 entrance fee along with an essay of 75 words or fewer explaining why they wanted to own one of the estates.
Example 2:
Wesley Ludlow and his wife, J.J. Rodgers, were unable to sell their 4-bedroom, 2-bathroom house because of the dormant real estate market in their hometown of Red Feather Lakes, Colo., the Washington Post reported.
They decided they needed a solution to the problem of having a second mortgage, and wanted to sell the home that had been sitting by its lonesome since they built a newer home closer to town. They chose to try and raise $200,000 by asking for essays of 500 words or fewer and a $100 entry fee.
They determined that if they could not get over 2,000 entries they’d return to selling their home the traditional way.
Why is this interesting--aside from the oddity of it all?
At first glance, while this may look like a gamble, the end result is in the hands of the seller. They stand to profit from the entry fees at a price far beyond what many of these homes could originally appraise for. Of course, the risk lies in how the contest is marketed. Websites have been established to market and advertise these contests, but many are out of date and don’t target the right types of people.
In the end, Johnsen could earn several million dollars more than it’s appraised value for her estate as a result of her marketing efforts. The estate has been appraised at $3.7 million.
Johnsen is unsure how much money she will make at the end of the deal because overhead costs are often unpredictable. State Government determines the maximum number of entries that can be accepted, but Johnsen determined the minimum and holds the power to cancel the contest if she chooses.
The jury is still out for Ludlow and Rogers, who have not yet chosen an essay winner. If they meet their requirement of 2,000 essay submissions, they plan to put the surplus money towards their children’s' college educations.
The clear benefit for investors is the ability to simply settle their estate issues and potentially profit from selling real estate in an otherwise fairly stagnant market without picking up the phone to call a real estate agent.
The question? Who's keeping Uncle Fred from winning the house?
Labels: finance, investments, people, real estate
In a world full of ‘experts’ willing to sell you any kind of ‘expert advice’ on just about anything, a person is scarce to come across a book worthy of purchase. Toss in that same book, and add to it a controversial topic in the real estate industry, and you’ll have people running into next week.Frank Curtin has been featured by NuWire before. I’d like to take a moment to mention what we didn’t spend much time on in the original article about him. Frank has a heart for people – specifically a heart to educate people - that is clear. He is also an investor who works with foreclosures. For some, nay, most people, this could be a challenge. You see, Frank is an investor who’s helping people who are facing foreclosure, and helping investors who work with preforeclosure properties. Not just by offering them a cure to their financial ailments by purchasing their home, but by first diagnosing the ‘disease’.With all due respect to investors who prefer the strategy of buying pre-foreclosure properties – there is a serious problem in our country – serious enough to merit ‘crisis’ level attention. Serious enough to get the government to consider cutting its citizens checks (this is a whole other blog post).The problem does not just lie with predatory lenders, or predatory investors. The problem lies with people who are unable to manage their mortgage commitments due to their life circumstances. The problem has to do with mismanagement of finances coupled with dreams and visions of home ownership. Now, without getting into my personal opinions on personal money management (they are quite strict, and I’ll leave it at that) – I appreciate Frank’s approach to working with his clients in this dire state. I appreciate his willingness to help solve the root of the problem, rather than let visions of dollars direct his actions. I also understand that this approach is unique, and some may disagree with it, which is why I’m writing about it here.Frank is the first to admit that his primary objective with his business is to help people keep their homes. He happens to make money doing it, and that’s fine. He is an investor, after all.
Very simply, Frank and his partner have put together a book called The Mortgage Survival Guide, and an asset planning program to help homeowners facing foreclosure determine where they are in terms of their assets. The materials teach these homeowners how to approach their lender, and work out a mutually acceptable agreement. If, in the long run, the program doesn’t work for the homeowner and they do end up having to foreclose on the property, Frank and his partner have a second solution for them.Where this is important to investors is in the training Frank’s program gives investors who work with preforeclosure situations. He explained it best in our article:
“Following the book publication, we quickly realized that families who are late with their payments aren’t buying anything. So we created The Mortgage Survival Guide Associate Program. Our associate program trains professional real estate investors how to work with homeowners.
The investor buys 60-day mortgage late leads from us, along with a case of books, and they gift it to the homeowners who decide to participate in the program. So with this program, the homeowner will decide for themselves whether or not they can afford their home. When they can, we simply wish them well, and we ask them to consider maybe paying it forward. And when they decide to sell, our investors step in and use a variety of investor strategies, depending on the specific situation, to help that homeowner avoid foreclosure.
The best part of the system is that we have exclusive 60-day mortgage late leads which enable us to reach homeowners long before it’s too late.”
The foreclosure market is controversial – no one can disagree about that. Any topic is going to be difficult when you’re dealing with discussing the lot that life has given someone, and the basic need for food, water and shelter. Throw a family into the mix and there is no denying that there is a major human element in investing in preforeclosure properties.
The undeniable benefit that Frank brings to the game is putting the decision to go into foreclosure back into the hands of the homeowner, empowering them to either find a solution, or bow out gracefully. It allows some dignity in an otherwise demeaning situation.
I believe that investing in foreclosures can be smart for the right investor – the most important part is knowing what motivates you. For Frank and his partner, education comes first, and the investment deal comes second, and I sincerely hope that his approach continues to make waves in the investment world.
Sidenote: If you have a second, visit www.5000families.org- Frank and his partner have teamed up with this site to help families in financial hardship. Labels: economics, finance, people, real estate, service providers
Real estate investors know one thing all too well in the everyday rat race of the world of investments – the familiar challenge of finding credible information sources to turn to when considering a new investment.In my position at NuWire, I always have my eyes and ears open for interesting people doing interesting things. Amy Phillips, CEO of DeedQuest is just that – she’s not only a female entrepreneur, she’s also developed a company that provides a tool that will be, in coming months, quite helpful to investors looking for a practical way to evaluate deals, strategies, and ideas.The purpose of DeedQuest is to streamline the process of real estate investing by creating a platform of people, resources, data and tools that’s accessible to all investors, or would-be investors. I decided to hop on and register to see what kinds of tools are available, and scope out the user interface.Now, a disclaimer: Bar-none, the most common complaint that I hear is that the biggest frustration investors have with the real estate market today is the lack of accountability among service providers and so-called ‘experts’. It’s hard to know who to trust. And who to pay for advice. And really, should you have to pay for advice, especially when said advice comes under the guise of five DVDs and a handbook? Frankly, that’s one of the reasons that NuWire exists, and one of the reasons I so enjoy being a part of the team here – we have taken on the duty and obligation of due diligence and education in an industry that makes a lot of empty claims. But I digress. I get excited about companies that exist for the same purpose that we do – this industry is in need of some strict accountability – and fast.So, I registered. Here’s what I learned: members of DeedQuest have the option of searching different markets for deals, statistics and data, news and are provided links for other resources that pertain to the area they are interested in. They also are able to analyze properties they are interested in using the built-in property analysis tool, which allows them to calculate potential return on investment and cap rates for different properties. Members can also participate in forums, search properties and save their searches and listings within their profile.All in all? Quite impressed. This is a tool that investors would be wise to take advantage of.
I have to admit to being pleasantly surprised with the functionality and ease that DeedQuest offers investors to analyze deals and learn about new investment strategies. Okay, okay. That, and I’m excited to poke around and learn more about other members.Labels: people, real estate, service providers, technology
