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Boy was Mike ever excited! He found his first real estate investing deal; a property he planned to keep as a rental. Knowing that Kim and I loaned money to purchase investment homes, he gave me a call.
Mike’s contract was a gem of an opportunity – at least according to him. The seller told Mike that six other buyers were lined up with cash money. If Mike wasn’t able to close within a week, the seller would let another lucky stiff…errrr…I mean investor…have the home.
Mike explained that the house was built in 1955, had three bedrooms and one bath, needed a good bit of work, the neighborhood was okay but not great, and like-kind houses in the area rented for $800 per month. The seller told him the home’s fair market value was $115,000, but he was willing to let Mike steal it for $89,000.
Mike was chomping at the bit with no time to waste. He needed a purchase money loan and he needed it now!
After digging into the guts of this “deal,” here’s what we discovered. Read More >>
I want to take this opportunity to talk to you a little bit about commercial property. I've got a lot of experience in commercial property from developing vacant land to income-producing properties of all kinds. My favorite is development.
But first, let's talk about what is commercial property. And, in the world of residential it's anything over 4 units. So, a 4-plex is not commercial, but a 5-plex is considered commercial. And, some of the properties that I have dealt with actually had income from tenants. I've had office buildings, I've had apartments, I've had retail and two or three other things, heck, I even had a mobile home park at one time, and over the years I've pretty much dabbled in everything.
I've specialized in nothing in the commercial world because I'm more of a generalist than a specialist, and of course we could have this discussion for hours. I think the smartest thing to do is to be a specialist because you can get good at one thing and not have to do so much and go through the learning curve that I had to go through. Read More >>
“One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.” ~ Elbert Hubbard
Camfind is a new app that makes some big promises. It claims to be able to identify literally anything just by snapping a picture. I was quite skeptical since my past experience with Google Goggles left me hoping for more accuracy. But from object to QR codes, Camfind is far better than Google’s long forgotten product.
I used Google Goggles way back in 2010, but it has never been updated, so I haven’t touched it since. But I was intrigued by Camfind just because of the application to real estate needs. It could be a great way to identify a specific style of house, if you are looking to replace hardware in the home, perhaps a specific door knob, this has the potential to be very useful in this field. Read More >>
This month I will continue explaining what I believe to be one of the best ways to add additional income to your wealth building strategies investing in Paper Assets.
There are two types of promissory notes "performing" and" nonperforming". The performing promissory notes are the ones being paid by the borrower every month as agreed. The nonperforming promissory notes are not being paid as agreed and in many cases are in default and in the foreclosure process. Depending on what the asset is that has been used as the collateral for the note, if not being paid as agreed, it may be in jeopardy of being foreclosed upon and the real estate may be taken back or the borrower of non-real estate may be taken to court by the lender to get a judgment against borrower to try to reclaim the money they lent to the borrower. I believe every real estate investor needs to understand how paper assets can be a huge part of their wealth building plan.
One word of caution I want to mention, if you decide this is something you might like to participate in ALWAYS be sure to do your due diligence before ever purchasing any paper asset. The reason I say that is because I recently looked at a portfolio of defaulted notes held by a major bank. When I did my due diligence I found several properties that had a promissory note and mortgage attached to them had been bulldozed and no longer existed and all that was left was a vacant lot. A vacant lot is not worth anywhere near the amount owed on the promissory note. If I had not done my homework and I had bought those particular promissory notes and I decided to continue with the foreclosure that those properties were already involved in there would be no way I would ever get back as much as I might have paid for the promissory notes. Read More >>
The process is supposed to be simple. If you have a securitized mortgage, you make your payments to a servicing company. The servicing company is granted the authority by the certificate holder of the loan to collect the payments and enforce the terms of the loan. But what if that servicer never actually had the right to collect? Even if they had the right, what if they covered all of your missed payments to the certificate holder and its trust that owns your mortgage? If this were the case, your loan is current. Would the servicing company have the right to foreclose on your loan that is current with the certificate holder/trust?
In most cases the servicers are making the mortgage payment to the certificate holders (the owners of the debt), whether the borrower makes their payment or not. This means that the certificate holders of the loan are getting paid, therefore there is no default giving them a reason to foreclose. This certainly explains why you very rarely see a declaration by the certificate holders or their trusts claiming a default! The servicer makes the payments and collects their service fees until they decide to foreclose, despite the fact that the certified holder of the debt never experiences a default. Once they foreclose on the loan, they can collect even more fees. Pretty sweet racket for the servicers, right? 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 >>
You find a good piece of income producing real estate that you decide to buy.
You have little money to buy it, but you decide to use whatever money you have as part of your down payment.
You get qualified for a 90% LTV loan.
You call around and you are able to raise the remaining money from your close friends and family for the remaining down payment. You promise to pay them a generous interest rate of 8% for lending you their hard-earned money.
The following month, you find another good real estate property that you decide to buy.
You have no money to buy it, but you know you can raise the money.
You get qualified for a loan with 90% LTV.
You call around and you are able to raise some of the money from your close friends and family. Again, you promise to pay them a generous interest rate of 8% for lending you their hard-earned money. This time, you remember about a line of credit you have, and so you decide to use all of it to close the deal. Now, you have raised all the money to buy this property. Read More >>
Kim and I have been managing rental property and tenants since 1997. We still own the very first single-family investment property we bought way back then!
Between then and now, we’ve made every landlording mistake in the book. We’ve bought bad rental properties, rented to awful tenants, and let tenants get three or four months behind in rent.
Here’s the important thing to remember: With every mistake we made, we learned what not to do. And with everything we did right, we learned what to keep doing. That said, here are the top 10 landlording lessons I’ve learned over the years.
Number 10: Take the magic nickel. Why own rental property? If you flip a house, you make a dollar. The only way to get another dollar is to find and flip another house. With rental property, you only make a nickel. But it’s a magic nickel that you get every month for as long as you own the house!
Number 9: Begin an eviction ASAP. Over the years, we’ve had tenants not pay us on time. In the beginning, we’d work with them only to be left holding the bag after three or four months of non-payments. When a tenant defaults on the lease, immediately file for eviction in order to get the eviction clock started. Read More >>
“Investment personality?” you might ask. “What’s an investment personality? I want to make more money than I have. That’s my investment personality.” Okay, we’ll admit it: the idea of an ‘investment personality’ might not seem to have a lot of merit at first—until you realize that you do have a set of clear priorities and preferences based on your experiences. To one person, Real Estate IRAs—for example—might fit perfectly in line with their investment personality. For someone else, a Self-Directed IRA of a different sort might be more appropriate.
The question becomes: what exactly is your investment personality, and how can you know it? Let’s look through some basic questions to find out exactly what yours is – and whether or not Real Estate IRAs are the right match for you.
Basic Investment Personality Questions: A Short Quiz
Your investment personality might not be the same as your normal personality. Some people who find themselves perfectly risk-averse and introverted in their personal lives might enjoy a riskier approach to their investments…and vice-versa. Let’s take a few moments for some questions that may just reveal some things about your investment personality: Read More >>
Last month it was in California, this month it was in South Carolina. All across the country we are seeing rescission letters stopping foreclosures in their tracks. Over the last few months I have been writing about how effective a Truth in Lending Act (TILA) rescission of your mortgage could be, and how the banks are getting nervous. Well, the results keep coming in, and they are extremely encouraging!
One of my real estate investor students recently explained to his father how he might be able to use rescission to stop the foreclosure on his home. His father sent in a rescission letter and the 20-day period for the bank to respond went by without a peep from the bank or their attorney. When the auction day came up, the investor and his father went to the courthouse and explained to the judge about the rescission and the Supreme Court’s ruling on the matter. The judge pushed their auction to the end of the day in order to move onto other houses. At the end of the day, the judge asked for a copy of the Supreme Court decision to review it. After reviewing the decision, he canceled the auction and called for a new hearing. Read More >>
“With Google I'm starting to burn out on knowing the answer to everything. People in the year 2020 are going to be nostalgic for the sensation of feeling clueless.”
~ Douglas Coupland
Go to your computer right now and Google “real estate.” Go ahead, I dare you. Care to guess how many results you’ll get? Well, I just tried it, and I got 1.1 billion results. That’s billion with a b. Talk about information overload!
You’re pretty sophisticated, though, so you know not to try that kind of a mushy search. And you already know that you can search specifically for images and videos. You also realize that Google is pretty good at guessing what you’re looking for, and it will usually put those results first. But not always: If you search for “bronco,” Google won’t know whether to give you information about cars, football, or rodeos.
Luckily, you can tweak your searches to be surprisingly precise, if you know how. Here are some tricks for searching on Google that I’ve found useful. I’m concentrating on Google because it’s so popular, but some of these will work in other search engines, too. Read More >>
There are many creative ways to find motivated sellers and promote your business. One of the great ways to get positive exposure for your business and give back to your community is to sponsor events or teams. There are lots of great ways to do this.
You can sponsor sports teams such as soccer, softball, bowling or track. You can also participate in a local golf tournament for charity. One of the ways to do this is to provide uniforms or shirts which of course have your company information on them. Walk-a-thons are another great way to achieve this goal. This is a good way to get advertising out for your real estate investing business and support your community at the same time.
Another way to promote your real estate business in a positive way is to sponsor events or take part in local functions by donating promotional items. For example, if your community is having a local fair or parade, you could donate balloons to be given out to the children which have your company name and logo on them. These are always appreciated and it's a good way to get your company information out to the public. These events usually get press or television coverage as well. Imagine a news shot of a parade where every child is holding a balloon with your message on it! Or, imagine the winning team getting their picture in the paper wearing shirts with your message on them. What better advertising could you ask for! And what better way to let people know that you buy houses! Read More >>
If you have done wholesaling for even just a handful of months, you have undoubtedly come across that property that was going to be an easy deal, a sweet deal, a killer deal only to have it stall and possibly unravel because of a title issue. Obtaining clear and marketable title is a key item that rarely gets focus in courses I come across. It is usually a ‘the attorneys will take care of it’ issue. This is 100% true except that it is still YOUR deal first and as long as it is your deal, you must remain in the driver’s seat.
Too many times, I have come across deals that stall simply because as a wholesaler, we forget that the closing attorneys get rather busy themselves and we may find our transaction playing second fiddle or even backburner to ‘easier’ transactions for the closing attorney. This is not a fault of the closing attorney. Think about it, like you they most likely want to knock out the low hanging fruit the same way you thought your deal would be an easy one!
Sadly, this results in even more time to resolve issues and potentially frustrated Buyers both with you and the closing attorney. Not all Buyers have the same desire to be patient to get a deal done. So how do we handle this? Read More >>
In this article I am going to take a different approach as to the format. This time I am going to give you a list of tips for finding and working with real estate Coaches and Mentors. A good education is paramount to building any successful business. Good mentors are the foundation of a good education. Here are some things to keep in mind.
Getting paid by your tenants in a timely fashion is one of the biggest challenges of being a landlord. QuickBooks can help in several ways.
You're meeting your business goals. Making sure that every property that has a tenant has been invoiced in QuickBooks. (You invoice in QuickBooks so you can track the timely payments made by the tenants.) You take advantage of vendor discounts. Basically, doing everything in your power to keep cash flow humming.
But you can't control how quickly your tenants pay you.
You can, though, use QuickBooks' tools to:
Figure 1: QuickBooks lets you accept payments from tenants in multiple forms. Accepting credit cards and e-checks is likely to speed up your receivables.
Negotiating is a vital part of your business when it comes to cashing in big on short sales. It is always important to know who the investor is on the loan, and I’m not referring to who is servicing the loan and collecting the Sellers payments. There is an investor behind the scenes. Also, find out the type of loan, ie: private, conventional, FHA, Fannie Mae or Freddie Mac and whether there is private mortgage insurance (PMI) or mortgage insurance (MI) on the loan. Knowing all these facts allow you to negotiate based on the percent of value each one of the Investors and/or Private Mortgage Insurance Companies on the Loan will accept on a short sale.
I found this new information to be very interesting and should not be taken lightly when negotiating on a short sale. Many Sellers are behind on their monthly payments which include principal, interest, taxes and hazard insurance. When the Sellers make their payments, the taxes and insurance monthly payment is placed into an escrow account to pay the taxes and hazard insurance when they become due. When there is not enough money in the Sellers escrow account to pay taxes, the Lender will pay them. However, when there is not enough money in the Sellers escrow account to pay the hazard insurance policy, the Lender still pays it, but it becomes Mortgage Forced Insurance. This is in place only for the protection of the Lender, not the Sellers, and normally costs 2 to 3 times more than normal Hazard Insurance. Read More >>
It was March 12th, 1982, when I had a decision to make, and it didn't seem like a very big one. You see, there was a seminar coming to town called “How to Buy Real Estate with No Money Down,” and it caught my attention because I certainly had none and didn’t want to continue doing what I had been doing for most of my life. I believe I saw the commercial on television, and after about the third time it aired I got to thinking about it and said, “Well, gosh, what have I got to lose. I know it's a scam, I know they're full of crap, but I might as well go down and check it out. Maybe there is something there, maybe I can find a way to get out of this mechanic job and make a little money for a change that lasts more than 15 minutes.”
Now, this was not an easy decision because I was going to miss my favorite television show “Dallas” with J.R. Ewing. For me to miss J.R. in order to go to the seminar was a big, big deal. We laugh about it now, but it wasn't so funny back then because J.R. was the guy that gave me hope. He's the first exposure I had to see what it was like to be very rich. I couldn't really see myself as J.R. at that time, but I certainly wanted to be like him. I'm not sure I wanted to be as mean as he was. Of course, some people will say I am. I certainly wanted to have his money and his power. Read More >>
Recently I was having a discussion with a friend of mine discussing some of the different ways to create wealth not only from real estate but other forms of investing that can give huge returns. We talked about the usual ways of making money buying real estate and we also talked about other ways of creating income without having to do any physical work for the money. Of course when you are a real estate investor your first thought is usually either about, buying foreclosure properties, wholesaling properties, fixing and selling houses at retail prices, and also buying long term income properties.
One subject I have never talked about before that I think is an important part of every real estate investors portfolio of investing opportunities is to also own paper assets for income. From this point forward we will refer to paper assets simply as "Paper". So what are paper assets? Paper assets come in many different forms. Some different paper assets come in the form of property tax certificates, land contract paper, contract for deed paper and promissory notes secured by a mortgage or a deed of trust paper. It is my belief that every real estate investor should be diversified and have several different income streams to help them build the wealth they desire. Read More >>
Have you been in real estate for 6 months, or have you really been in real estate for 1 month? Because if you’re really in real estate, you’ve made a deal by now, maybe several.
Here’s the truth: If you’re not making offers, if you’re not making deals, you’re not in real estate…yet.
Are you making the mistake of preparing and then doing nothing? Listen, if you’re prepared, then you have the education. You’ve paid a lot of money to take courses, you’ve read the books, and you’ve watched the videos. You understand that buying real estate is not rocket science. You understand that making an offer is not difficult. You have a power team: a contractor, an attorney, a survey company, and a real estate agent.
But you just don’t seem to be able to get one deal done.
What will it take for you to make a deal?
How can you overcome this fear and lethargy? Read More >>
Over the years investors have always wanted to know which way they should go. Buy a house cheap, fix it up and rent it out. Over time collect the cash flow, keep some and use a portion to pay the house off. It’s the oldest and truest way to build wealth and a secure retirement.
Then there are those who are seriously focused on making some money now. They either want to “Wholesale” a house doing nothing to it all or the alternative option may be to acquire, renovate and sell for a really good profit and do it again. This method doesn’t build wealth but you can make some potential steady income.
Truly good real estate investors know the valuation of their deals is key to insuring success and protecting projected profits. To effectively determine if a deal is a rental building wealth or flip to make some much needed cash, you have to analyze a deal fully. All the market areas covered by REIAComps.com, insure you easily know which way an investor should go. Read More >>