Before I proceed to my trading strategy and my trading philosophy, let me briefly talk to you about one of the processes I used in my real estate business, when I was buying foreclosed properties in Southern California. There are several other businesses that I’ve done on a large scale in my life, but this is the last one I am going to bore you with. After all, you didn’t come here to read about my glorious achievements in business. You came here to learn how to make money in forex, and you came here to read about the forex trading system that I use for making money in forex. But as we approach the core part of this article, I really want you to understand the practical approach I’ve always had to other businesses, so that you could appreciate my current practical approach I apply to forex.
I think out of all the businesses that I’ve ever done, my real estate business resembles my current forex business the most. The idea with my real estate business was to find properties, where the property owners could no longer keep up with their mortgage payments, and the idea was to approach those property owners, give them some cash, get them out of bad situation, and acquire the property at a major discount. The process for that was very simple. The regular process that happens in California is that whenever a loan is behind by several payments, the bank issues something called Notice of Default to the owner, with the exact amount owed to the bank for back payments, plus interest. 
After such notice of default, the owner has 90 days to bring his property current, and if he doesn’t, the bank usually schedules something called a trustee sale, and the property is sold at an auction, where the bank collects all the money owed to them, and the owner is left with any overbid left from that. The notices of default and the trustee sales notices are free public information, and are issued by the local county. I personally was subscribing to www.countyrecordsresearch.com, where I was conveniently getting those fresh notices every single day, with a lot of other useful information, such as loan amount owed against the property, and other property details. When I first started doing this business, it was very tough, because I was focusing on 4 different counties in Southern California. I didn’t know what was what, I had to constantly pull comps, also known as comparable sales, in order to find out how much each property was worth, then I would go and try to talk to these owners, and I would stumble, and be stupid. Then as time progressed, I learned, and it became more and more natural. I started focusing on properties in only two smaller neighboring counties, and I came to a point, that I could take any notice of default, see the street, city, size of house, year built, number of rooms, and I would be able to name the value within $25,000. Then I would look at the loan amounts, see if there is enough equity left in the house, and I would make a decision whether it’s worth going after, then I would pick my top picks, create a map of 20 different properties to visit, drive up there, and start talking to people. Even though every property situation was different, and had to be handled differently, I still had a system that I was following. I obviously naturally developed certain proposals and responses to common replies, but still each situation was different. Then the more I did it, the more intuitive I became as I was going through leads. Based on the house parameters, and the neighborhood, and the equity, I could somehow feel whether it could be a worthy drive or not. With my own experience and help of my partners, I developed certain nuances, like if I saw an Asian last name as the owner, I would skip the property automatically, because from my experience and the 20+ years experience of some of my partners, we came to a conclusion that it was pretty much impossible to get a good deal from an Asian person. They are just too smart and too educated, and most importantly not lazy. They seemed to always find a way to get out of a bad situation with the best outcome for themselves, while squeezing everything out of the property, and I say that as a compliment. Then there were other types of names that were much bigger possibilities for a great deal, especially certain names in certain neighborhoods, and I don’t want to mention them, because I don’t want to sound racist. I remember I was looking at one property that I had a good intuitive feeling about. It was worth $175,000, and it had an outstanding loan of only $47,000 that was in default. The property was in a hard to find location of some neighborhood with a lot of drugs, so I intuitively knew that other investors probably wouldn’t try to go after that property, so I went after it, and I was right. Apparently the owner of that property lived in another state, she rented the place to some friends who later got hooked on drugs, so now they were ruining her property, and weren’t paying her rent. All I had to do was locate that owner. I made one phone call, and I asked how much she wanted for the property, and she answered: “All I want is $70,000, and I know I am giving it away very cheap, but I am just too sick dealing with it, please take it.” So we gave her $23,000 cash, decided to bring the loan current, and basically after some hassle were looking to make close to $100,000 net for the property. It was unpleasant, trying to kick those druggies out, but for $100 grand, I’ll do it. That’s just one example, and between myself and my partners, I have dozens of such examples. But the point I am trying to make here is that I had a systematic approach of approaching this foreclosure business, even though each situation was unique and pretty much completely different. And another very important point is that I wasn’t buying every property I was knocking on. In order for me to find one candidate, I had to go thoroughly, and I mean thoroughly, through around 50 properties. And when I mean thoroughly, I mean if the property was empty, I had to do deep research to find out what’s up with it, and perhaps it had an owner that just died, so I had to find heirs, and buy their rights to the property for a lot cheaper than it was worth. Most of those heirs are lazy, so they are happy to give up whatever is not even theirs in the first place for very little. I remember, my partner actually acquired several houses worth around $2 million, for only around $200,000. The owner was a father who died, his sons hated him, because he was gay, one son was in prison, the other was on drugs, my partner approached them, explained the situation, asked them how much they wanted, and they just wanted a hundred grand each. Go figure…and real estate is full of such opportunities.
So what are the biggest lessons in this real estate story? The lessons are that I had a systematic approach, I was actually doing it, and acquiring a lot of experience, as I acquired more experience it became more intuitive and more natural. Each situation required unique approach, so each situation required very deep state of awareness, which was acquired through systematic and regular approach which built experience. Sometimes the situations may have been similar, but always unique, and the more I was doing it, the more I understood how to handle each situation. I had to go through a lot of research and a lot of leads, and spend a lot of time before actually pulling the trigger and actually buying something. I was looking for cream of the crop opportunities. I think you are already starting to understand where I am going with this, and how I am going to relate it to forex and my forex trading system. Forex trading system simply can't be mechanical. It has to combine mechanical processes with general awareness and experience, and quality of a trade is a lot more important than quantity.
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