ForeclosuresMass - ForeclosuresMass Monthly - Nothing Succeeds Like Success - An interview with full time investor, Derek Ebrecht (November 2006)

Derek Ebrecht hasn't been investing in foreclosed properties for all that long. In fact, his first deal closed less than two years ago, in February, 2005. Since that time, however, Derek has continued to grow his business, and today, he completes several deals each year. We caught up with Derek to learn more about why he focuses exclusively on foreclosures, as well as what's worked for him to date in closing profitable deals.

ForeclosuresMass Monthly: Welcome Derek. Can you tell us how you got started in foreclosure investing?

Derek Ebrecht: Sure. I was working full time in another field, and while I knew I wanted to get involved in real estate, I wasn't exactly sure at first what my particular focus would be. So I decided to do what I could to educate myself about real estate and investments.

I took courses online, read books, joined a mentoring group and got involved in a local investment club. I just did what I could to learn as much as possible. As I learned more, foreclosures seemed to make a lot of sense. At this point, that's where I spend my time.

* Next 37 17 investors only!

DE: The thing I like about foreclosures is that the people you work with tend to be highly motivated. That's an essential piece for getting a real estate deal done. People facing a foreclosure know they need to take action, and the key is to convince them that you and your solution are what's needed for their situation.

FMM: On that point, what do you find works best in convincing a home owner to work with you?

DE: Well, of course, the numbers need to work. These are people who are under a lot of stress, and they have many folks coming at them from all kinds of angles - bankruptcy attorneys, agents, mortgage people, banks, etc. So for starters, the deal I offer has got to be competitive. But beyond that, it really comes down to building rapport with the homeowner. In fact, I'd say that if you're not a real people person, you'll have a tough time being successful as a foreclosure investor. You can learn a lot in this area, and certainly improve your interpersonal skills, but I think that on some level, either you're good at building rapport and trust or you're not, and people can sense that.

DE: When I began I was trying everything, including just door knocking and generally fumbling away. It always seemed to me though, that if I just kept at it, things would start to click. Eventually, that's exactly what happened.

DE: Most important: Keep moving. It took me five or six months of work until I closed my first foreclosure deal in 2005. That may seem like a long time, but you have to just keep plugging along. If you stop along the way you lose momentum. The contacts dry up, the opportunities evaporate, and you end up back at square one. So my advice is to stay with it, and believe that things will come together for you.

DE: I think it's important to have a hearty negotiation. In fact, and although this may seem counterintuitive, I've found that if you're too quick to make the deal happen, people often end up with seller's remorse.

FMM: That does seem counterintuitive. Isn't a quick deal what everyone wants?

DE: Well, that's what everyone may say, but in practice, I find that people like to negotiate a bit. For example, we got a call recently from a gentleman who, while not yet in foreclosure, was just tired of dealing with certain things and wanted to get out of his property. We came in, saw that the house had good bones, and felt that with a bit of clean up, we could flip it quickly. So we made him an offer. Not our best offer, but reasonable.

We ended up going back and forth a few times and in the end, he felt good about how it came out. The thing is, had we offered the higher price up front - our true top figure - even if he accepted, he would have been less satisfied.

Think about it. If I give you a price and you accept with no negotiation, you go away wondering if you could have gotten more. In turn, I may go away wondering if I could have offered less. If one side feels like the other side got it all in a deal, something will go wrong, and so negotiation on the way to agreement is always good for both sides.

FMM: That's a great insight. Any final recommendations before we let you go?

DE: Just one... don't cast too wide a net at first. When I started out, I was way too broad. I was sending letters out for anything from Worcester going east. People would call and I'd drive an hour to look at a place. I realized eventually that I was casting too wide a net, and that the standard advice of staying within 30 minutes of your own backyard was valid. Once you become more successful and have more resources, you can always expand, but when you start, do your best to stay geographically focused.

Derek Ebrecht is a licensed Massachusetts Real Estate Agent and investor. He works in the Greater Boston area. He can be reached at derekebrecht@hotmail.com

Did you like this article? You May Also Like:

	Feature Article: How to Become Financially Literate - Without Getting a Degree in Finance Ann Bellamy Think you need a finance degree to understand the real estate "numbers" game? Think again. Ann Bellamy, real estate investor and hard money broker, gives you seven tips on how you can become financially literate and comfortable with real estate investing. (Hint: Don't be afraid to take chances.)
	Success Strategies: Establish Your Credibility as a Serious Real Estate Investor Ann Bellamy In a business where most deals are based on referrals by trusted associates, building your credibility is as essential as carrying a cell phone. Networking alone is not enough - you need to establish yourself as a trusted and knowledgeable partner. In this article, Ann Bellamy shares eight strategies to help you build a reputation as a trusted expert in your field so that others think of you first when an opportunity arises to partner on an important deal.
	Success Strategies: Is Real Estate Investing For You? Kelle Sparta Real estate investing is an attractive, potentially lucrative field. But it's not for everybody. Author, trainer and veteran investor Kelle Sparta highlights the six attributes needed for success, on her way to helping you decide if real estate investing is for you...
	Interview With The Expert: Sonia Stingo Sonia M. Stingo CPA, PFS, Livingston & Haynes Everyone knows that If you own investment property, you may be eligible to deduct loses on your tax return. When?, Why?, How much?, Under what circumstances? ... those are much more complicated questions. We caught up with certified tax expert Sonia Stingo this month, and asked her to review some of the basics...
	Feature Article: Change Your Focus - Change Your Life John Alexandrov, CEO, Legacy Capital Solutions, LLC Financial independence - a goal we all crave. According to John Alexandrov however, what most people don't understand is that making money in real estate is not only the result of hard work and technical proficiency. In this month's feature article, John shares his insights on how a change in focus can lead to a change in everything...
	Success Strategies: Three Tips for Updating Your Financial Myths Szifra Birke It's a fact that old money myths can keep your from reaching your goals. If you carry around ideas such as, "I'm not good with money" or "It's better to help people than make more money," then you need to read Szifra's article on how to banish these limiting beliefs from your life.
	Success Strategies: Generating Profit in a Down Market Michael Ouellette With property values decreasing across the board and sellers refusing to lower prices, it's more important than ever to know how to determine the true value of a property in order to realize profit. Long-time real estate investor Michael Ouellette explains why you must know the After Repair Value of a property - versus its market value - and why exit strategies such as owner financing can net you greater profits and appreciation long term.
	Feature Article: Use Exit Strategies to Reach Your Investing Goals Joseph A. Roche Planning your exit strategies will help you anticipate potential opportunities and problems and how you'll deal with them - as well as ensuring that you don't lose money on a deal. Real estate investor Joseph Roche discusses the six most common exit strategies, including wholesaling and lease options, and how and when to use each one to reach your investing goals.
	Interview With The Expert: Managing "Bad" Credit Marty Eerhart, Senior Loan officer, Assured Mortgage Getting the approval needed for an investment loan is heavily dependent on your credit score. Unfortunately, if you have "bad" credit, it can get in the way of making a purchase. Marty Eerhart talks about what you can (and can not) do to improve your credit score.
	Interview with the Expert: Strategies for Building Your Real Estate Network Cathy Toomey, Broker / Owner, Stone Ridge Properties Real estate agents are often the first people homeowners call before their home goes into foreclosure. In this interview, Cathy Toomey, a real estate broker, tells you how to build a solid network of real estate professionals - and how to use this network to find homeowners "motivated to sell."