Frank Curtin has been involved in the financial lives of others since he was 10 years old. Working with his father, a professional financial and tax consultant, Curtin was doing tax returns at the age of 12 and has been involved with financial modeling of businesses since he was 17. Curtin has worked as a project manager for environmental consulting firms and as a supply chain strategy consultant for IBM. He now helps families resolve their mortgage problems on a regular basis.
Curtin earned a Master of Business Administration degree from The Ohio State University, a Graduate Certificate in Administration and Management from Harvard University and a Bachelor of Science from Kent State University. Utilizing his more than 30 years of financial analysis experience, Curtin offers the benefit of his knowledge in an easy-to-understand format for homeowners experiencing financial hardship. His analytical aptitude for solving problems is always at work. His joy in life comes from helping families gain control of their finances.
NuWire: Can you give us a little background on yourself and talk a bit about how you got started in investing?
Curtin: I moved to Texas in 1990 and…married the love of my life in 1994. I have two children that I adore. My youngest son is almost seven now, and he’s my pride and joy. My older son has gone on to be with our Lord. On December 14th of ’05, James passed away due to a sudden liver failure when he was only eight years old. He needed a liver transplant, and he didn’t get one in time. But since that time…I recognize what’s important in life so much better now.
About my investing, I built…my very first house I built when I was 18 years old, thanks to a good friend who was a contractor building his own house. I was part of everything from the basement excavation to the trim carpentry work—we did it all.
It wasn’t until 2003 that I began to [buy and] sell foreclosures….I did a deal or two…and boy, did I spend money foolishly.
I had an opportunity to help a friend build his house here in DFW [Dallas/Fort Worth], and I reconnected with that awesome feeling that I had the first time when I built that house. So I started doing some new construction again as well as foreclosure-type work.
My partner had a rough go at his all-in business venture, and he’s the partner that I have today, and he ultimately filed for bankruptcy following two periods of being in preforeclosure. So we learned a lot about the process together and we began to add loss mitigation work to our plate.
Today, I do new construction and preforeclosure work.
NuWire: Foreclosures are a huge topic right now in the real estate investment circles. Are they a specialty of yours? And if so, can you explain to us your work in that area?
Curtin: My partner and I realized that we could not help very many families doing business the way we were, because loss mitigation work is time consuming. So we wrote a book titled The Mortgage Survival Guide to help homeowners resolve their mortgage problem on their own. We published it in January of 2007, and we now help families in trouble all across the United States.
NuWire: How do you feel your approach to foreclosures and preforeclosures [is] unique?
Curtin: 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.
NuWire: When you structure the investment deals that you actually participate in, what are some of the things that you always make sure to do or include in these deals?
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Curtin: First and foremost, I create a minimum of three exit strategies for each deal. I think that most investors panic when their plan A doesn’t happen. Then they begin to search for options, and they’re doing it in a worried state. It’s really hard to think clear when things aren’t happening as planned. So I make sure I set trigger points to shift to plan B or C when A has kind of run its course.
I also line up my private money before I know the deal is a go….There’s nothing more frustrating than losing out on a deal that I couldn’t fund because of poor planning on my part.
NuWire: Can you talk a bit about those [exit] strategies and which ones have been successful?
Curtin: When I’m looking at a neighborhood and I’m evaluating it, I need to know, is this more of an investment rental-type neighborhood? Or is this a neighborhood…where the homeowners are the actual residents? That is going to dictate what type of strategy I’m going to go for on a particular project.
If the project’s got a large amount of equity in it, I may look to retail that property at a deep discount….I’ll clean it up a little bit, and I’ll immediately put it back on the market and sell it at about 85 cents on the dollar, if I can pick it up at 70. And I can make a quick buck that way, because I know that even in a slow market, when a property is 15 percent below what the other properties are around them, it’s going to move fast.
Another strategy that I do is I look for wholesale opportunities. I know that I have…a finite source of my private money sources. And when they’re tied up in deals…I may need to make a deal happen but move it quickly, and so I’m very well-connected in the investment community….I’ll tend to flip a deal off to somebody and wholesale it to them, where I’ll sign it over to them for a small fee.
I tend to like doing…the scrape-and-builds. I look for opportunities…on really, really ugly houses where I have an opportunity to get in on this property, knock it down, and put something else in its place.
I don’t keep properties, hold them, and rent them out. I tend to not want to do that very much. It’s just not the style that I choose, and I have students that do that….It certainly is one that I consider.
And I’ll tell you that the reason I consider that is, if I’m holding a property for a long time in a retail market and it’s not moving…I’m going to…allow myself to put in a lease-option tenant or some sort of a tenant in there to start covering the cash flow while I allow for that market to start recovering a little bit.
NuWire: I’m interested in hearing more about your strategies with scraping and building. What advice would you give [to others]?
Curtin: First thing is, never pay more than the land value.
Some of the homes that are really prime candidates for scrape-and-build, there’s somebody living in there right now. And to them, it’s their residence. And I don’t ever tell them that [scrape-and-build is] my intention because I certainly wouldn’t want to offend them.
You’ve got to line yourself up with a good contractor to build. Contracting can be done, especially right now, very inexpensively, as the home building has slowed down, the new construction starts have slowed. There’s a lot of contractors out looking for work and so they’ll come down on their pricing. Now is a great time…for investors to do spec homes.
NuWire: Do you hire out a contractor, or do you do the work yourself?
Curtin: We are our own general contractor, and we hire out all the subs underneath that.
We do all high-end luxury homes, though, when we do that. We typically stay in homes $600,000 plus…mostly because it’s the same effort at a $100,000 home as it is at a million dollar home, except the profit’s a lot smaller in the $100,000 home, and there’s less room for errors.
NuWire: What kind of buffer do you require in terms of profitability when you choose to take on a project like that?
Curtin: There’s two rules of thumb. One is there must be a 20 percent spread for the profit. And then, I also want to put a 10 percent contingency in place. When I can put those two factors in place, I can make any deal successful at that point.
I’d like to get that get into that property at 70 percent of what the retail value is. And then I know I’ve got a good deal at that point.
NuWire: For people that are looking at taking on a scrape-and-build project, what types of neighborhoods and cities do you think would be best for that kind of project?
Curtin: I’m generally not going into neighborhoods where I’m the first. I don’t want to test the market like that.
I look to see, has one or two homes already been knocked down and new construction occur around there? When I can see that going on, I know now is the time to get in because if two of them can be done, I know that many more can be done. I also know that it’s going to be a trend in that neighborhood and I can generally pick up multiple deals in a neighborhood when that trend starts to take a foothold.
NuWire: When you go in to purchase one of these homes, how do you determine what the home is going to sell for?
Curtin: The first thing I’ll do is look to see what are the comps of new homes in the area. That’s partly why I like see one or two homes already there, so I can look at new construction sales. I want to make sure that the sales have already happened. It’s one thing to see a listing; it’s another thing to see a sale.
I look to see in a quarter- to half-mile radius: Do I have at least one property sold that I can show myself and show my lenders when I’m getting my construction financing lined up that the market will support this price point? That’s why I don’t like to be the trailblazer.
NuWire: What lessons have you learned in your experiences with doing scrape-and-builds?
Curtin: Overpaying for the land.
Finding the land value is key. And the easiest way to do that…is we look to see: What size home would I put in this property?
If…I can put a 4,000-square-foot home up, and I can get somewhere between $200 and $300 dollars a square foot for it sold, I now know what the retail is, and I know what my build costs are, I’ll then work back and say, “That’s the most I can pay for this property.” And that’s how I determine the land value. I don’t use tax records. I try to use mathematical formulas that will work in the actual construction of the project.
I want to make sure there’s 30 percent from what I know I can sell it for, for my costs. And then…I look right at the land value and I say, “I can’t pay any more than that, so I have to start lower than that, and leave a little room for negotiation. And I have to have a walk-away point.”
One of the lessons I’ve learned is sometimes investors feel pushed to do a deal, maybe because they’re lacking cash flow or whatever the reason might be for them, they have a tendency to take on a deal that’s really not a good deal. And so I will say, from a lessons perspective: Whether or not you need the deal, do not make one work for the sake of making a deal work. It only works when the numbers truly say, "Go."
NuWire: Is there anything else that you think…might be important for investors to hear, whether about the Smart Guides or The Mortgage Survival Guide, or about your personal experiences with investing?
Curtin: I like to say that if I put the people that I’m doing my work for first in all of my motives, I come up with a far superior product. And if my focus is on money and making money, and it’s only on making money, I tend to find myself getting burned. And prior to my son passing away, I was focused more on the money. I used to do…equity stripping and things like that, and then I’d write checks at closing. I was doing the things that everybody warns you not to do.
And I can tell you that since I’ve changed where my heart is on the whole matter, I have gotten much wiser in my choices, and I’ve been more successful—far more successful—at deals.
