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I want you to succeed in acquiring private money for your deals, which is why I have to tell you this: Over half of the money from my private lenders comes from their retirement accounts.
It's important to understand the flow of money and how it relates to your own success. If you don't understand how it works to invest retirement funds, you'll miss out on a lot of great opportunities, so I'm going to correct that here and now.
The next time you meet a new private lender who doesn't have any experience but has retirement money ready to go, you're going to go through a 14-step process to make a deal possible.
One quick note before we get to the plan: You don't need to tell your private lenders everything you're doing behind the scenes, because you don't want to confuse them. That's not because you have anything to hide, but rather because you want to put this process truly on automatic for your private lenders. Read More >>
Welcome back! In last month’s article, we discussed how it seems like there are a lot of people who are having a really hard time taking the action they need to take in order to have success. Based on my experience & observations, I theorized that a big reason for this is not just because of the inherent fears that people have, but also because many people seem to believe that the actions they need to take are going to be painful, or at the very least - not fun.
So we began by talking about one of the most common activities that a lot of people seem to have challenges with: Talking on the Phone with Sellers and other people! The first thing that needs to happen is to change your mindset before you even begin to make your calls.
The last thing we discussed was how to use a cheap, simple kitchen tool (a 3-minute hourglass egg timer) to determine whether the person with whom you’re talking is going to waste your time or not. Go back to last month’s publication and re-read that if necessary.
Now, in this article, we’re going to finish up by learning some cool new tips on how to make taking the actions that you know you should be taking a lot more FUN! Ready? Ok, here we go... Read More >>
So you think you can’t get a seller to pay you to take their problem home off their hands? I have heard many times from students, friends and relatives alike, “are you nuts, nobody would pay you to take a house off their hands.” Wanna’ bet??
There have been many instances where a seller needed to get rid of a piece of property quickly and they needed our assistance to help them make their problem go away. They were more than willing to pay us to make that happen. You have to remember that you are not in the business to make someone else’s problem your problem. We get paid to solve problems for sellers.
Now, you will never get paid to take a house off someone’s hands unless you ask. You never know what a seller will agree to until you ask them. The worst they can do is to simply say “no”. You just have to explain to them why they should pay you to take their problem out of their hands and outline the benefits to them of selling their property this way. Read More >>
When stock markets are volatile, investors (rightly) get nervous. After all, many people have most of their wealth in the stock market. If the stock market goes down, then they see their wealth shrinking...and for people close to retirement, this is a scary prospect indeed. But it doesn’t have to be this way. With Real Estate IRAs, many people learn that retirement income doesn’t have to depend on the quality of the Dow Jones Industrial Average. Instead, retirement income can depend on your strength as an investor, and the wisdom it takes to know what true diversification really is.
And just what is that “diversification” we’re talking about? Some people will tell you that investing with diversification means having the right mix of stocks and bonds, of having stocks split up into small cap, medium cap, and large cap equities. But all that really means is that you’re invested in two different investment categories, all the while ignoring all of the very real possibilities for retirement income that are out there.
If you’re sick of feeling nervous every time that stock ticker heads into the red, then it’s time to broaden your horizons as a wise retirement investor and look into what diversification really means. Read More >>
Want to Get In?
Having a simple process to learn new things can enhance your personal and professional life. For example, I wanted to learn how to listen to Jazz. It's all about the learning curve and experience. I had to have a desire to learn something new. There had to be a simple system that I would be able to relate to and learn something about complicated jazz music. The music seemed to fit my personality. I did not grasp why some jazz was so caustic & other jazz was soothing romantic and enveloping.
If I couldn't get an understanding quickly, it could prevent me from being able to listen to a new richer, quality music. My goal was to be able to discern really good jazz and why jazz sometimes, just did not fit with my values or my personality. I utilized a five step process to determine if Jazz was a new genre for me to enjoy. This same process can apply to seeing if a career in Real Estate is for you, and how to be successful. Read More >>
I want to discuss some basics for getting started in real estate investing. Everything I’m about to share, can be applied to helping anyone get started in real estate investing. I am going to give you a few keys to getting started. Of course, REIAComps is essential to making sound decisions for your real estate business.
Let’s talk about a desire to work in the real estate investing field. Real estate investing may not be for everyone but real estate investing CAN offer anyone the financial freedom we all crave. But most important is to always take a valuation first approach to every new deal you see. You must know the best purchase price and After Repair Value (ARV) first. Never let someone tell you the value, use REIAComps to know the value for yourself.
Now the people that make it in real estate investing all have a few things in common. First, they run their real estate investing business like any other business out there. Second, you cannot be afraid to fail. Everyone has failed at something but the most successful people out there learn from their failures. The third thing is that you have to put a good team together. You do not want to be the person doing everything in your business. Doing everything is a recipe for failure. You have to put together good people who you can trust and rely on. The fourth thing is that you need a mentor. Gaining from the knowledge and experience of others is invaluable. Read More >>
For the last few years I have been giving out advice on how to invest in real estate. On top of that I have been giving out the content for free. However, there are a large number of you who have not or will not take action. At some point you have to take everything you have learned here and everywhere else and take action. Do not be another “paralysis by analysis” type.
The number one thing that you need to do is find a deal. A real deal that anyone would buy, finance and/or want to partner on. In most markets that I am in that magic number is currently 70% LTV minus repairs, sometimes 75% LTV minus repairs. Many would say that these deals do not exist but I am purchasing at least one on these deals each month. You do have to do due diligence on plenty of not so attractive properties but if you look at enough properties you will find a deal. When you find a deal, do not hesitate to write the contract and lock the deal up. Take ACTION! If you write an option contract you have nothing to lose but the option money, which can be as low as $10 but usually $100. This is where your negotiation comes into play. During this option period you will do more extensive due diligence and discover if you really do have a deal. Read More >>
If you plan to process your own payroll using QuickBooks, you need to understand how payroll items work.
Considering processing your own payroll in QuickBooks? Whether you’re moving from a payroll service or getting ready to pay your first employee, you’re taking on a complex set of tasks that requires a great deal of setup and absolute precision. But the reward is complete control over your compensation records and transactions, and constant access to your payroll data.
If you have no experience dealing with paychecks, deductions, and payroll taxes, we strongly recommend that you let us help you get started. QuickBooks simplifies the actual mechanics of setting up and running payroll, but there’s still a lot you need to know.
It goes without saying that accuracy is critical here. You’re responsible for your employees’ livelihoods and for maintaining any benefits they’ll receive. Federal, state, and local taxing agencies will count on you to submit the proper payroll taxes and filings on time; failure to do so can result in stiff penalties and worse. Read More >>
A real estate investor offered to buy me lunch in exchange for information. He wanted to know how we hold title to our properties; in other words, whose name is on the deed?
When we met, he explained that he’d gone to the deeds room in the courthouse to look up which properties Kim and I own. After much research, he concluded that we don’t own any houses – and he was right!
But how can I be a real estate investor and not own any real estate? Easy answer: We don’t own any properties personally! Having assets in our names can be reckless. Plus, it can wreak havoc on our estate plan when we die.
(NOTE: I’m not an attorney or a CPA, so what I say is just my opinion. Seek competent council before you make any big, life-changing decisions.) Read More >>
Costar is a $1 billion, national comprehensive commercial database that provides marketing, statistics, demographics, traffic counts, true ownership, and other information on over 4.5 million commercial properties for national commercial real estate agents. They have researchers that make over 10,000 calls per day to brokers, agents, and owners to verify or change information making 5.1 million data changes per day. Recently, Costar purchased Loopnet which is a commercial platform available to the public.
Costar does Market Research Reports for major cities across the US which is what we are using for our comparison. Costar clients include: Read More >>
A good investor always knows the way out before going in. I don’t like the common real estate adage “You make money in real estate when you buy”. Personally I think this is a terrible statement. You make money in real estate when you cash the check and it clears the bank. If you don’t exit the deal profitably then you didn’t make money when you bought. Ask anyone who has been through a foreclosure if they made money when they bought. You may create value when you buy but you make money when you sell. This is why I don’t like that statement. It minimizes the value of a solid exit strategy. In this article I will discuss how to exit a master lease option (MLO) deal PROFITABLY.
The first step in analyzing a MLO deal (or any deal) is to decide how you will get out of the deal someday in the future. This can be hard when you are new to the business because everyone has told you that closing the deal is all important. While closing is important it’s not as important as the exit. Here are some exit strategies for MLO deals. Read More >>
The number one thing you need to understand about a short sale is that the short sale lender must realize the true market value of a property. Recently we got a house in Sanford that needs everything and I mean everything redone inside and out. The house has multiple types of siding, the tile inside the house has been pieced together, various sizes and colors, and is pushing up from the ground due to water damage, the rotted wall from the 3rd bedroom was removed which makes the house a 2 bedroom, the air conditioner is not working, doors, lights, fixtures are all missing, and the kitchen cabinets have mold all over them. SPS is the servicer for the Short Sale Lender and they are really easy to work with. In fact, they normally process a short sale within 30 days, so you need to be ready when you submit the short sale package to the bank and ask them to provide you with a Broker Price Opinion (BPO) or an Appraisal.
We submitted everything into the bank and were very excited to immediately hear from a BPO Agent (Real Estate Agent) stating that she has been instructed by the Bank to go out and get value. We scheduled an appointment to meet her out there. We had everything ready in a BPO/Appraisal Package to provide to her. We had the following items: Purchase Agreement, Estimate for Repairs from a Contractor, Comparables and liens from the City for major code violations. Read More >>
“My grandmother had this high-tech security system - a rusty nail she used to lock the door.” ~ Quincy Jones
Once fall comes, we’re thinking about getting the kids back to school and falling into a familiar routine. You’re not the only one thinking about that, other people may be looking forward to quiet days in the neighborhood too. Break-ins usually happen during the day when no one is at home. If your neighbors are on the same grind as you are, you may not discover a robbery until you get home and see your door open.
These thoughts are frightening, but there are things you can do to prevent it. Wired home alarm systems are great, but if you don’t have the budget to pay a monthly service to monitor your property a one-time investment is perfect. There are wifi cameras and apps that you can use from different manufacturers, motion sensor lighting and timers for your interior lamps. But having the peace of mind that there are eyes on your house at all times and having great customer service is a winning combination. Read More >>
This month we are diverting to another subject that is fresh on my mind. The concept of momentum.
Momentum is something we all know can be very positive but I believe is greatly underestimated. When I ride my bike I find some striking analogies to business. Riding a bicycle, whether rode or mountain involves momentum in a major way. It’s the difference between going up a big hill or walking it. It’s the difference between clearing a dirt ramp or rolling over it. It’s the difference between keeping your rhythm going or speeding up and slowing down constantly which is usually much more exhausting.
The same things apply in business. As a wholesaler, you have heard it said that you must always be marketing. I can tell you it is much, much easier to keep your marketing going than to allow it to stop and then start back up. On a bicycle, when I see a hill coming, I tend to attack it fast which makes it much easier to get to the top. Business is no different, when you see an issue coming up, hit it and hit hard with such determination that you will find solving problems becomes much, much easier. Your brain is more open. Ideas flow more freely. And you are much more likely to succeed in providing superior service to whoever you need to work with! Read More >>
For the real estate investor, knowing how to capitalize on what others commonly overlook can be the key to success. And to that end, probate real estate has become a profitable investing niche for many successful investors.
Probate is the governing process for the distribution of a person's assets after they pass away. Many investors stay away from probates because of their lack of education. This breeds fear---a fear of the unknown. However, a fear of the unknown is the same as going into a dark house. If you turn the light on, the fear goes away.
Years of television, movies and the media have established the belief that if one goes to law school, that individual knows all there is to know about the law. But that isn't the case. If your neighbor is a brain surgeon and your child falls out of a tree and breaks his arm, would you take him to your neighbor or to the emergency room? Just like doctors have specialties so do lawyers. However, very few would specialize in probate. Instead, they specialize in personal injury, corporate law, tax law or something more traditional. Attorneys usually take one probate course in law school… estates and wills. As a result, the majority of the attorneys of record that are handling probate cases are doing so because they hand-led other matters for the deceased, such as, divorce, corporate matters, traffic tickets-etc. Probate is not their area of expertise. Read More >>
Existing Loan Stays In Place – No Liability To You!
“In order to carry a positive action we must develop here a positive vision.” ~ Dalai Lama
A Subject-To deal simply means that you get the deed/title to a property and take control over the property. The existing loans stay in place in the original homeowner’s name, negating the liability to the purchaser. The mortgage is not being paid off through a Subject-To contract transaction, just taken over by the purchaser. As long as the purchaser of a Subject-To deal makes the mortgage payment to the existing mortgage lender, there are no consequences to either party. However, if the purchaser stops making the payments on the mortgage, the seller’s credit will be damaged.
Most sellers are in a situation where they may have to relocate quickly, have no equity in the home and just “want out,” or are about to go into foreclosure and want to save their credit. These folks are motivated to sell on a Subject-To deal to get the payments caught up (or maintained) and stay on time to help their credit.
One reason you would purchase on Subject-To is to utilize a seller’s lower interest rate than that is on the market at the time. For instance, if the market rate is 7% and a seller has a 5% fixed rate, the 2% difference can make big difference in your monthly payment. You are able to purchase the home in a 7% market at 5% interest! For instance: Read More >>
Last month I talked about how I created a near disaster for my family because I got too big for my britches and thought I could buy 100 houses in one year when I truly was not prepared to undertake a monumental task that large that has so many tentacles I had no idea I had to deal with.
I now realize that every one of these people provide a service I desperately needed if I had any chance of buying anywhere near 100 houses in any year. Without the services of these people there would be no way I could have achieved my goal of buying 100 houses in any year
Each of the ten deals I did in that one-week period were good deals and bought at prices that would have given us a good profit. I had bought each of the ten properties with Hard Money loans from local private money lenders who knew and trusted me. Because I couldn’t get the repairs completed, I quickly ran out of the money I had borrowed in a very short period of time. To keep my name good with my lenders, I had to take out personal loans to make the individual monthly payments for each property that was sitting empty and not bringing in any money. I had to borrow money I needed quickly to make those monthly payments. It didn’t take long for me to realize I was out of money. I was scared to death I wouldn’t be able to continue to fund these empty houses and ruin my name and reputation with the lenders. Read More >>
As a Mentor, one of the biggest things I stress to my Students/Partners is that you can’t buy and flip houses in sloooow motion. As soon as a Seller calls you, you should fill out a Seller Information Sheet and schedule for the following day (within 24 Hours) an appointment to see the house. Most of the information that is needed on the Seller Information Sheet you can get directly from the Seller. I have been asked “How long do you talk to a Seller about their home?” Since this is your first communication with a Seller and you NEED to build rapport, you should be on the telephone for a long time. What does that mean to you?
I would suggest at least 30 minutes on the phone to talk to the Seller about their home, their life, where are they going…anything and everything you can think that you might have in common with the Seller. Sellers like to do business with people they like. So, if you are only on the telephone for 5 minutes, then did you build rapport or even completely ask all the questions that are on my Seller Information Sheet? Probably not. Call the Seller right back and ask ALL the questions on the Seller Information Sheet so that you will know what he/she wants for the house, why they are moving, where they are moving and when they want to leave. Read More >>
There I was standing on the side lines in one of the hottest housing markets scratching my head as to whether I should buy and get in the game. I was new to the real estate game. I had been buying for a few years. I had limited access to money. The year was 1991. I was wondering what I should do to get more money (that still has not changed I need access to more cash). I was wondering what I needed to do to get the great deals. I did not think about learning new tricks to buy houses. Then again there weren’t any seminars or real estate investment groups I could attend. So I missed it. Do I regret it? I got an important learning lesson. The lesson was easy to understand and hard to implement. I needed to get more people involved in my investing business. I put an ad in the newspaper. “I am looking for a few good partners who are looking to take advantage of this incredible market. People who are willing to take calculated risk to get a reward of money. Those individuals who want to earn wonderful rates of return on their money while enjoying a hands off approach have an opportunity to hit it big in this real estate market.”
The market is hot right now. There was a recent article in the Atlanta Journal Constitution that stated Atlanta was the hottest flipping market in the country. The bad news is a newspaper reporter picks up on the market when the market tends to be at the peak. I have wholesaled more houses this year. I have done more flipping this year than in past years. I wrote an article in 2012 that said the market had turned in Atlanta. So where are you? Read More >>
Since 1999, Kim and I have continually learned from Pete Fortunato how to creatively structure and fund our deals – without going to banks!
The BEST real estate investing meeting we attend is the weekly Real Estate Exchangers meeting in St. Petersburg, Florida. It's creative deal structuring and funding at its most pure.
Here's an example of a deal that was put together at yesterday's meeting.
Rich has a SUV that he’ll sell for $3,000 cash. Pretty straight up deal, right?
Pete offers to trade his Nissan truck for Rich's SUV. But Rich doesn't want a truck; he wants $3,000 cash! Does Pete have a hearing problem or what?
Here is a classic example of Use What You Have, To Get What You Need, To Get What You Want. Read More >>