I set up the new DFWREIN forum about 4 or 5 years ago as an alternative to the anonymous posting that was allowed on the aireo.com web site. At that time, aireo.com was the most popular web site in the DFW real estate investor market.

Because everyone who reads a post on the forum can easily see who is writing the post, many people do not post. It’s not just the sneaky, conniving or underhanded people, it’s old real estate investor. I think there is still a romantic feeling to doing a deal in the backroom, thick with cigar smoke, dim lights and a game of poker.

I think a lot of older real estate investors are not used to the idea of everyone knowing their cards. They have been playing close to the vest their entire lives and disclosing their actual position on any subject or any deal is as foreign to them as revealing their hole cards to other players.

I bring this up because when I see a post without comments I think, there is no interest here. Perhaps I shouldn’t post more on this topic. But it turns out that there is a lot of excitement about this article. It’s just backroom excitement.

People call up others they trust and discuss everything without revealing their positions to everyone. They treat posts written here the same way they do their backroom deals. Close to the vest. No one reveals his hand until its been paid for.

My first reaction to hearing about it (and I do hear about it) is that these people are cowards who realize their positions have no merit and can’t stand the light of day. But that’s not it. I think that for all their preaching about win-win solutions these guys are still playing poker. And poker is always a win-loss solution. Always!

I used the poker metaphor on purpose. At the end of the night, poker results in an equal amount of winnings and losses. If you add all the winnings and subtract all the losses then the result will be zero. There is no other possible outcome. It will always be zero.

In economics, that’s called a zero-sum trade. If the winnings are all positive and if the losses are negative then the sum of all the winnings and losses is equal to zero. This is very important to economists because they have discovered that most people make non-zero-sum trades.

Those trades are almost always positive-sum trades. It makes sense. Why trade with others if you always feel like you are losing in the trade? Except for forced trades you tend to support more trades where you feel you came out ahead.

I used to buy and sell used mobile homes. Someone once asked how I keep my buyer from finding out how little I paid for the house I’m selling. My answer was simple. I tell them how much I paid for the home and when I bought it up front.

I purchased one home for $3,500 and sold it to a nice couple a week later for $5,900 with a single cleaning, a lot rent payment and mowing the lawn twice. I explained that the previous owner couldn’t wait 3 months to sell and was willing to discount it and that I was willing to wait for the right price. I sold it with financing on their first visit.

It was a win-win solution on the purchase and on the sale. When I bought it, the seller asked me how much I thought I would get for it and I told him I would sell it for $1,000 down and $4,900 on financing. When he asked me why I was only offering him $3,500, I told him that I needed to make a profit. He sold it to me on our first meeting. It was a win-win for us. He wanted a quick sale for cash and I wanted more inventory to show.

In both situations I wasn’t playing poker. I was making a win-win trades. I didn’t have to keep my cards secret. Everyone knew what I was doing. I didn’t have to keep the address a secret or not advise them to seek out competent legal advice. Heck, I encouraged it. Not because I secretly hoped they wouldn’t but because I wanted people to feel comfortable with their purchase next week and next year. I wanted them to tell their friends and family about the deal they got.

This does not mean you should not take proper precautions. If it is possible for a buyer to close you out of a deal for a bigger profit then it is up to you to structure the deal so that you can’t be closed out. Don’t depend on the kindness of strangers.

A positive sum trade is still a positive sum if all the winnings are on other side and a small loss is on your side of the trade. Your best bet is still your legal and real estate investment counselors.

If you find yourself playing poker, consider stepping back and reconsider the deal. There is probably something you are missing.

It occurs to me that I am an unknown quantity and that I may be making a few people nervous. Let me lay some fears to rest.

Here is some of what I am:

• I am a landlord.
• I own a small mobile home park in Stephenville, TX.
• I also own other property which I rent to make income.
• I am a reluctant web designer who specializes in managed WordPress web solutions.
• I am a Domain Registrar. I own or manage about 50 domains for about $15 per domain per year. AIREO.com, DFWREIN.info and DFWREIN.biz are all registered with me. AIREO.com is managed by its owner.
• I am a web site Host. I have hosted DFWREIN.com and a dozen of others for more than 5 years.
• I am a web programmer. I make a few extra dollars programming and consulting as the IT guy for several customers.

Here is some of what I am not:

• I am not the newest founder of a REI club in any part of Texas.
• I am not interested in starting a club for real estate investors.
• I am not interested in starting a web-based club for real estate investors.
• I am not interested in competing with any present DFW REI clubs.

Cliff Robertson owes me money. I abducted his web sites to get some of the money he owes me back. I have been doing that through advertising. Biting the hand that feeds me (people visiting these web pages) by chasing them away is not my goal. However, I really need to get my opinion out there. Not giving my real opinion because someone may feel offended is not going to happen. If you don’t like something I write, respond. Tell the world. I’m not going to delete it (unless you are being offensive — keep it clean).

I would like to provide the web site sections that every club in DFW needs. Forums and news. I know a few of the people involved with clubs and I know what your budget is really like. I think I can offer these services in a way that benefits both your club and the investor community at the same time. A property board for real estate investors makes sense, but there are already services out there that provide property listings to retail and wholesale markets.

Every time someone gets a club together they get a web site. They set up a forum and real estate investors have to visit every forum to stay in touch. Heaven forbid they mention one club on another web site. It would be nice to have one big forum with private sections for each club and a big section for general REI discussion. That’s the stuff I would like to provide.

So, if you have a club in a small city or in a big metropolitan area I want you as a customer, not as a competitor. I am interested in making your life easier. I think I can reasonably make you and your club more profitable and easier to run.

There are primarily four ways to get information on comparable sales (comps) when trying to determine the value of a target property. Those four are:

1. Doing Your Own Research
2. Internet Searches
3. Service Companies
4. Access to MLS

Doing Your Own Research

Within this category, there are four subcategories. Those are:

• Courthouse Searches
• Newspaper Listings
• Tax Appraisal Districts
• Master the Neighborhood

Courthouse Searches

If you live in a state that is discloses property sales information, you will have a much easier time than those of us who live in a non-disclosure state, like Texas. My understanding for disclosure states is that information on sales can be found at the courthouse if you’re willing to spend the necessary time. From that information you could devise your own methodology for determining comps. Certainly, it would be beneficial to know the history of a target property which you can look up while you’re there, but I think this would be very slow and probably not worth your efforts if the only goal is to get comparable sales data.

In some states the sales information is listed in the local newspapers so you could get a feel that way or create your own database and update it periodically. Again, I think this is a slow way to get things done, but it may prove useful to you in some circumstances.

Tax Appraisal Districts In my area, the tax assessed values provided by the tax appraisal districts are frequently useless. You’ll have to get a feel for this in your area as you may find that the assessed values are close in many neighborhoods.

Master the Neighborhood

Probably the most accurate way is to spend the necessary time to master your farm areas. By this I mean learning the values for certain neighborhoods that you target. You can speak with Realtors, attend open houses, view as many floorplans as possible, etc. until you can drive by a house at 30 mph and know within a reasonable range what the property will be worth in good condition. This information comes in extremely handy when talking to sellers on the phone. If a seller calls you and tells you the house is in ABC subdivision, it’s a three bedroom, two bath, two car garage house and it’s 1,500 square feet, it’s nice to immediately know the market value in your head.

Internet Searches

I know some investors use online searches to determine value. I tried this when I first started and found the information to be outdated and not even close to what I consider a comp. For example, at the time the Austin, Texas market was appreciating almost one percent per month. Retrieving sales numbers that were almost a year old and five miles away from my target property was useless. If you’re in a disclosure state, this methodology may prove more helpful. I haven’t used or even looked at any of these sites for this purpose in years, but here’s an initial list you could view, although keep in mind that some of these may be regional-specific.

• www.Realtor.com
• www.Homeradar.com
• www.Homegain.com
• www.Yahoo.com
• www.Domania.com

I’m sure you can find many more sites like these if you’ll spend the time to do so.

Service Companies

Some investors subscribe to services that provide sales information. This can be in the form of software in the form of CD’s that are sent out periodically or it could be an online service where you login to retrieve information. I’ve never used any of these services and typically, the reviews are mixed as to their usefulness. Again, that may come down to whether or not your state discloses sales information. Here’s a list for you to check out:

• First American Real Estate Solutions (www.firstamres.com)
• Dataquick (www.dataquick.com)
• Netronline (www.netronline.com)
• CD-Data (California only – www.cd-data.com)

Access to Mls

Having access to Realtor’s proprietary information that is available in the Multiple Listing Service (MLS) is invaluable. In my opinion you should begin working toward this goal regardless of which comp methodology you plan to use or currently use. Again, there are several ways to accomplish this goal:

• Ask or Hire Someone to Help
• Become a Realtor
• Obtain an Associate Membership
• Relationship Access

Ask or Hire Someone to Help

One way to obtain information on sales is to contact those who have access to it. For example, you could get in touch with a Realtor, Appraiser, or Title Company and establish a relationship. At some point fairly early on you’ll have to make it worthwhile for these folks to continue helping you, so it’s important to either pay them for their assistance or to get some deals done where they get paid.

If you’re going to go this route, I think it’s extremely important to have the actual data sheets sent to you so that you can begin to learn how to evaluate values. You’ll soon discover that no one runs comps like you do. After all, a comp is merely someone’s opinion of what a property is worth. I’ve had Realtors provide alleged comps on properties that were in different subdivisions miles away, fifty years older than my target property, with a different number of bedrooms and baths, different foundation structures, sold years prior, etc. Do you really want to trust six figure decisions to someone else’s judgment?

Become a Realtor

Although I frequently see disparaging comments about Realtors and the liability associated with becoming one, I think this line of thinking is way overblown. I can promise you that if you’re in real estate long enough; you’re going to end up a target for someone. Whether or not you happen to have a real estate license is probably irrelevant.

Then there’s the theory that you’re held to a higher standard if you’re licensed. Again, who cares? You’re not going to operate your business to at least the standards that Realtors are held to?

No, I’m not licensed and I go back and forth on whether or not I should be, but my decision, or lack of one, is based on costs versus benefits and being lazy. I’ve never met a successful investor who also happened to be licensed who told me not to get my license. It’s seems to be only the folks who aren’t licensed who warn me of the “risks”. So, my suggestion is to not rule out this possibility simply because someone else told you to or you read something on a newsgroup.

Obtain an Associate Membership

In some areas, the Board of Realtors will sell associate or affiliate memberships to non-licensed individuals. For example, appraisers may qualify and I’ve heard of investors being able to obtain a membership as well. In my area anyone who wants access to MLS must have a real estate license or someone in their office who is licensed. If you don’t know if this is available in your area, it’s certainly worth a phone call.

Relationship Access

Building relationships with Realtors and other professionals who have access to MLS is another great way to gain access. Granted, this methodology takes longer and requires ongoing efforts, but it is an effective way to get comps. You may start out initially with receiving faxes and then progress to limited and supervised access to the MLS during non-work hours. From there you might achieve non-supervised access, which then gives way to a full-fledged copy on your home computer. Anyway, you get the picture. As the relationship grows and the Realtor is fairly compensated for time spent, you’ll find it easier to ask for favors.

As far as how you do this, I would suggest scheduling lunches with the appropriate people. If you take ten Realtors out to lunch over a month, you’ll find someone willing to work with you. I would suggest contacting agents who specialize in commercial properties. The reason is simple. Agents who work the residential listings and buyers need to use MLS on a daily basis.

Commercial agents typically don’t. In fact, in my area commercial real estate deals are handled almost exclusively through networking. In other words, it’s done by word of mouth, phone and faxes and MLS isn’t even used. However, being a member of the Board of Realtors still requires paying the same dues regardless of the fact that commercial agents may not really use MLS. Is it possible that one might agree to let someone else pay for that service that they’re being charged for, but not using? Hmmm…

If you’re going to take this approach, tread lightly. In many areas allowing non-licensed individuals access to the MLS is viewed as a violation, thereby putting the agent’s license and livelihood at risk. Again, it’s a relationship thing. However, perhaps that agent opened a “branch office”? Anyway, it’s something to consider and I wanted to let you know that not only is it possible to do this, it’s not even that difficult.

Summary

In summary, let me state that no method for getting comps will surpass the importance of learning your market and more particularly, your farm areas. However, that takes time and I wanted to let you know there are other ways to get it done while you’re gaining the knowledge and experience. In my opinion the combination of MLS access and firsthand knowledge is critical in determining comparable values, but that’s not always possible, especially when just starting out.

So, it’s time to get busy chasing MLS access and learning your farm areas. Good investing …

A few people have written to me off line about filling the hole left by DFWREIN closing. I am not convinced that DFWREIN left a single hole. I believe it left several holes and I would like to see several solutions fill the gap.

If you want to start a club in your area I would recommend that you locate and speak with past and present owners of real estate clubs in Texas. Buy them some lunch and pick their brains.

You will probably find that REI club members want education and networking. Everyone wants to network with the most successful investor who will speak with them or with others who are at their same level of experience.

Education has two main groups of customers. Active investors want to know the newest information and want to skip all the basics. Inactive investors need to learn the basics and hope to find that one idea that will make real estate investing a get rich quick scheme.

That second group is huge. There are a lot of people that are too afraid to do their first deal. Those people will buy the ever-living heck out of guru programs to avoid going out and doing a deal.

I think you will find there are many holes left by DFWREIN. Fill the one’s that need filling and leave the others alone. Your club does not have to be the one-stop shopping place for all real estate investing.

A few years ago, I moved the real estate articles from their home on the DFWREIN web site to the message boards. My hope was that the staff at DFWREIN would have an easier time adding articles to the web site. It seems to me that only a few of the DFWREIN staff members ever knew about the forums at all. Adding the articles there was a bust.

This web site comes with a content management system. Every article or page is really a list of posts in a WordPress database. I modified a StudioPress theme which already many of these conventions installed. This means that articles are as easy to enter as any post. The only difference is that the article author is not usually the same person who added the article.

Another reason for adding articles to the DFWREIN forum was to get people to reply to them. Was it good? Did it suck? Is there some correction needed? That worked. A little. Very few people write in forums when compared with the number of people who read forums. It’s something like a 1 or 2 percent ratio, except in paid forums where members feel obligated to post messages.

Articles will go into the Articles category as well as the category for that particular article.