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AARE Investment News Update - 3rd Qtr 2012

Hi Kevin,

I hope you've all managed to stay warm and safe during our recent bout with Hurricane Sandy.  We only had our lights flicker a bit, and still, I didn't participate in the mad rush at the local grocery stores - if I was going to float away, I was going to do it having spent my extra time breaking into foreclosures (my real passion in life).  

MAKE SURE you "Enable Pictures" to see the pics of our newest project, included below.

As an investor working with both on & off-market deals, we always see a huge influx of competition whenever a national guru brings a training into town.  In this case, Than Merrill from Fortune Builders came into town a few months back, and trained a whole bunch of investors on how to "buy properties cheap".  I'm not sure on their business success, but as a pattern, we always find competition for on-market foreclosures soars with people paying too much - perhaps to get their first deal going?  We aren't sure.  The net effect is that it's always tougher to get deals on-market when this happens, so we rely heavily on our off-market sources - wholesalers, agent relationships, marketing efforts, and short sale company - to continue our influx.    

Our most recent deal we are working on is in my homewtown of Chelmsford, MA.  A referral from my financial planner (whoever needs an independent, non-partial guy, I'm happy to introduce you), we really spent time on finding out the best way to help this poor woman.  Her mother and father both passed away (one recently), she was disabled and also had hoarding tendencies we had to get over.  We were able to strike a deal with her which did not only involve a cash sale of her house, but also included hiring movers for her for as much as she wanted to keep, leasing out a climate-controlled storage facility for 3 months while she found a new place to live, and we set her up with a great real estate agent contact that could best suit her needs. 

                  

A quick "feel good story", the day before closing she was taking me through and showing me all the electrical switches, and labelling them.  "My dad was one hell of a carpenter," she said.  "But definitely not much of an electrician."  (It was then I realized we would spend an additional 7 full days trying to figure out what wires went where in the basement, with an $800 change order associated.) 

                                               

She started to cry as she wrote on the walls, saying her mother would never have allowed this.  I encouraged her to bring in her neices and nephews and have them all write on the walls prior to closing - which she happily did.  On my post-closing walk-through, we found drawings, inspirational quotes, and one wall that gave me a directive - to "take good care of her home." 

We look forward to showing Dawn the "re-emergence", and also have a few gifts we are dressing up from her old memories as well, that we came across.  Enjoy the pictures.  This one will be our next round of Rehab Chronicles too - so you can see the rehab take place as it happens.     

 

Local Market Update:

Our average hold time after a project has completed has gone up, but specific to New Hampshire properties only.  We find that NH properties, with the same finishes as MA properties and in comparable areas (good school districts, not busy streets, etc), take roughly 6 times what MA properties take to sell (under agreement in roughly 8-12 weeks, vs. 2).  This is in line with what we felt the absorption rates in the NH towns were - on average, a 1 month absorption rate in Massachusetts (i.e., Chelmsford, MA in the $250-$300K range) is comparable to a 6 month absorption in NH (i.e Hampton, NH, $250K - $300K).

We are still buying at between 57 and 68% of after-repaired value.  Our profit figures are up from 10% in 2011 to 11%, so we are holding strong.  Our average relist & resale price has gone up slightly from listing at 92% of fair market and selling at 91%, to listing at 95% and selling at 93-94%.  As we are still sure we are "the best property at the lowest price", we still feel this is a conservative approach, and are seeing success for both ourselves and for our investors.

We have yet to air on A&E's "Flipping Boston" TV program, as their most recent season filled up fast.  The host, David Seymour of City Light Homes, has let me know we are first in line for the next season, provided the right deal comes along (they want more drama than anything).  I've learned a lot about the TV techniques during this time - the biggest lesson I learned, is that there's a lot that goes on "behind the scenes".  The film crew is the one who approves or rejects sites for the show, and we're working on a couple deals that should be great candidates; but at this point, they would have to be timed for next season. 

Our subscription amount of $300,000 for 2012 has officially been filled (thank you all for your loyalty!) for our Noteholder programs, but we are still accepting smaller investment amounts (minimum is $20,000) for our Private Lending programs, with annual returns ranging from 6-9%.  If you've not yet joined our team, contact us today so we can set up an appointment to see if one of our programs is right for you.  We also work with personal contacts at all the self-directed IRA companies, and are happy to assist in transferring your accounts over and with the paperwork involved in directing the investment.

As always - we appreciate your interest and support in our endeavors, as we hope you're seeing success as well.  Here's wishing you a wonderful holiday season, and - dare I say it - a very Merry Christmas!

 

Happy Investing,

 

You are receiving this message because it has been shown you have a previous relationship with AA Real Estate Enterprises LLC, now the AA Real Estate Group.  This is not a solicitation to buy or sell any registered security with the SEC, nor can it be treated as one.  AA Real Estate Enterprises LLC does not hold any financial or legal licenses, and advises you utilize your own professional advisors if you have questions on any investment opportunity presented.

 

And in case you need a refresher...

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Who is the AA Real Estate Group?

AA Real Estate Partners is a professional real estate acquisition company that serves to create opportunities for our investors. This is done through buying, selling, and managing single-family and multi-family homes.

AA Real Estate Enterprises, LLC (now, the AA Real Estate Group) was established by Nick Aalerud, our Managing Member, in 2005. Shortly after, he created AA Real Estate Partners as a division within this entity to serve our investors.

Within the past 7 years, AA Real Estate’s experience has spanned millions of dollars in closed transactions. As of the summer of 2011, we completed our 100th redevelopment deal. We continue to grow each year as well as additions to The AA Real Estate Group.

How Do We Invest in Real Estate?

• Buy and sell properties quickly.

• Renovate others.

• Hold onto others for cash flow and long-term appreciation.

• Occasionally make loans on other properties.

With our field expertise, conservative mindset, excellent track record and established relationships with all our contacts, we have a well-developed sense of what makes a good real estate opportunity, and what’s not worth getting involved in.