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If you ask most people they would probably tell you that the foreclosure crisis is over, and that we’re in the middle of a housing recovery. The fact of the matter is that foreclosures are continuing, but the banks have slowed and managed the process a bit to keep the government off their backs. That’s the bad news. The good news is that a recent Supreme Court ruling has provided homeowners with a silver bullet that could stop a foreclosure in its tracks!
As spelled out in a January ruling by the Supreme Court, a homeowner’s right to rescind their loan could immediately stop a foreclosure. The right of rescission is essentially a consumer protection built into the Truth in Lending Act (TILA) that allows a borrower to rescind their loan if the lender failed to fully comply with all of the requirements of TILA. As you might imagine, TILA violations are incredibly common. So how does the right to rescind stop a foreclosure? It’s simple. From the moment you drop your notice of rescission in the mail, the note and mortgage are nullified. The bank can’t foreclose on a note and mortgage loan that have been nullified. The bank has 20 days to challenge the rescission, but until they have effectively argued that they have the right to enforce the note and mortgage (without being able to use the note or mortgage in their proof of standing, the foreclosure cannot continue. It should be noted that this only works on primary residences. It will not work on second homes or investment properties. This also works better on refinance homes than on original mortgages, but it is still possible on original mortgages (purchase money mortgages). Read More >>
Anytime real estate investors get together the question immediately asked is, “How is your buying/contracting going?” What they are asking is do you have a good amount of leads coming in, where are those leads coming from and are those leads any good. Of course, mostly everyone says they are doing great. Personally, I like to “keep it real.” If leads are low I admit it because I know that they will eventually come in. Meanwhile, I continue working and following up with all the leads in the pipeline. The follow up is what keeps a real estate business, or any business, consistently profitable.
In real estate, you are not going to crush it week after week, month after month. Real estate fluctuates and what works one day may not work the next. The key is consistency. If zero seller leads are generated one month from mailers, it does not mean I stop sending letters, it just means mailers did not generate leads this month. The same can be said for internet marketing, bandit signs, networking, flyers, etc. As a real estate investor you must always market through as many avenues that provide the greatest returns. In some markets bandit signs may generate lead after lead while in other markets you get zero calls. I usually test out new marketing strategies for about six months. During those six months I keep records of the cost, leads coming in, appointments set, contracts signed, number of closings, and of course profit. This lets me know if the marketing is working or not. It also lets me know if the lack of closings is due to the marketing or the people receiving the leads. If people are clogging the deal pipeline it may mean they need more training. In other words, make the adjustments where they are needed to convert more leads. Marketing will always require tweaking and more tweaking just when you think it is “perfect.” While all this is helpful and profitable the number one cause of profit is in the FOLLOW UP. Read More >>
Most real estate investors have heard of the “Note Business” but many misunderstand it while others think that it is completely separate from the real estate business. The fact is, most real estate investors are in the note business, and they just don’t know it. The note business is the financing side of the real estate business.
Note Business in the Simplest Terms
The note business is based upon the purchase, sale and assigning of two documents: the promissory note and the mortgage agreement. These two documents represent a promise to pay and a solution for non-payment.
Note = Promissory Note = IOU (I Owe You)
Mortgage = Collateral Agreement = Foreclosure Agreement
When someone borrows money to purchase real estate, they have to sign an agreement to promise to pay it back. This agreement also outlines the terms of the payback. This written promise is not enough to get a loan. This promise must be backed by collateral of value, which is typically the real estate itself. The collateral agreement pre-authorizes the foreclosure of the property if the debt is not paid according to the promissory note. Read More >>
Be proactive about the security of your QuickBooks company file, and you'll be less likely to encounter data theft.
Thanks to the internet, privacy has been on the wane over the last few years. We assume that our addresses and phone numbers are public information, thanks to sites like Switchboard and 411.com. We hope that our dates of birth are private (though the number of birthday wishes on Facebook makes that doubtful), and we assume that our Social Security numbers are hard to get.
Your customers/tenants trust you enough to provide you with additional private information, like credit card numbers, bank numbers and more. And you've seen what an uproar occurs when major corporate entities like Target and Home Depot get hacked.
Your small business may not have hundreds of thousands of customer/tenant information files, but you can still be targeted by external hackers and even your own employees. Are you taking measures to ensure the security of that data stored on your hard drive and/or in the cloud?
Your Inner Circle
The last thing you want to imagine is that one of your own employees has been tampering with your QuickBooks company data. It happens, though, and you need to protect yourself from potential internal attacks.
One of your internal controls, then, should include the establishment of boundaries for every employee who has access to QuickBooks. You can restrict each staff member to specific areas of the program instead of sharing a master password and giving everyone free rein. Go to Company Read More >>
There has never been a foreclosed house which didn’t have potential profit written all over it. Today, several indicators including the firm RealtyTrac have released 1str Quarter 2015 data which shows foreclosure filings and default notices, scheduled auctions and bank repossessions are down over 5% from the prior Quarter over 2014 and are the lowest since 2007.
Knowing the true value of real estate is critical, try to do a deal without it and see. The guidance and data within REIAComps has consistently shown investors how to determine both solid acquisition value and after repair value to earn lasting profits.
Some of the most stubborn foreclosure cases are finally being flushed out of the foreclosure pipeline, and we all can expect to see more noise in the numbers over the next few months as national foreclosure activity makes its way back to more stable patterns by the end of this year. Thus, while foreclosures are down, they will always be with us. As investors, this s a good thing!
The data tells us a total of 152,147 U.S. properties started the foreclosure process for the first time in the first quarter of 2015. This number is down 11 percent from the previous quarter and down 8 percent from a year ago. Read More >>
Partners can really make or break your business. Finding good ones is easier said than done. How do you find or attract the right partners? How do you know when the right person comes along? Will they want to partner with you and what should you offer them when they do want to partner with you? These are questions I get asked all the time. Here are some ideas about partnering in real estate but this article is not about the legal structuring side of partnerships, it’s about the people side.
A good partnership starts with equal but opposite skills, not necessarily a friendship. It’s good to be friends with a partner but contrary to popular belief that is not the most important part and not where you should start. A good partner will bring strength to your weaknesses and you the same for them. You are going to be splitting a lot of hard earned cash with this person so you want to know what it is that they bring to the table. What are they capable of that you are not and what are they capable of that you couldn’t easily hire an employee to do? The first step in answering the questions is to do a long self-analysis. Start with what you are good at. Ok you don’t need a partner to do any of those things. Now what are you really bad at? Now you know what a partner should bring as far as skills are concerned. They need to be good at what you are bad at or have what you don’t. Read More >>
Warm weather is finally upon us! Time to get ready for those Summer vacations - trips to the beach, cookouts, swimming, boating, golf, tennis, and everything else that we love to do outside when the weather is warm.
Of course, if you live in the South, Southern California, or a place like Phoenix, you're used to having nice weather all year 'round. And I hate you. :)
But if you're like me, and live in a place where you get all four seasons (yay), you can appreciate how the change in weather can also trigger a change in perspective.
Long intro aside, there's something that I've been noticing over the past few years when it comes to marketing...
Ugly is the New Pretty!
What does that mean? It means that a lot of the usual, conventional, traditional marketing pieces or campaigns that USED to work for many years... simply don't work much any more these days. Read More >>
One way a lot of real estate investors use lumpy mail is when they are working the pre-foreclosure market. These people are getting stacks of mail and post cards every day from mortgage companies, attorneys and other investors. There is a lot of competition for these properties so you need to do something to make your mail stand out and look different from the others so it gets opened first. Since there are fewer foreclosures these days getting noticed is even more important to your success.
There are several ways to do this. One is to simply insert something into the envelope if you are mailing a letter. It might be a piece of candy or gum with information about your business with a tag line of "In a sticky situation? Call us first". Or, if you are using a piece of candy it might say, "Call us first, we can make you a sweet deal". It just needs to be something that makes your mail piece look different, and makes it stand out from everyone else’s.
You could also use a lumpy mail piece like a penny, then within the body of your letter; say something like “a penny for your thoughts on selling your home”. You just need to be using something that grabs the seller’s attention. Anything that feels different or makes noise will accomplish this for you. Be creative with your mailings and you will create more leads and do more deals. Read More >>
Recently a friend of mine sent me a chart created by the United States census bureau showing the numbers of home ownership from 1965 until 2015. Amazingly the number of home ownership in 2015 was almost exactly the same as it was in 1965. I found this very interesting because throughout all of those years between 1965 and 2015 homeownership escalated slowly until 2006 when the real estate market crash took place because of all the defaulting loans. As house prices dramatically declined people felt their homes were worth less than what they owed so many people quit making their loan payments causing many of the defaulted loans people could no longer afford. I thought about what this chart represented for today's real estate investors and I believe this chart shows us there is great opportunity for real estate investors of all kinds everywhere.
I am starting to see more and more new construction everywhere I travel and I am also seeing more and more deals completed by my students who are savvy investors all over this country. I’m an optimist, I truly believe that we are going to see huge profits made by those who step out of the traditional box and structure their deal differently than those who only do what everyone else is doing. I believe those of us who think different than the masses will prosper far more than the status quo. I am seeing the market slowly making a comeback from the disasters of 2008 for some of us but not those who are stuck in yesterday’s methods and mindset. Read More >>
Picture this familiar story: You go to a real estate meeting and meet a Buyer looking for property. Ecstatically, you immediately add them to your Buyers list which they fully expect. Within the next week or two, you get a deal and send it to them via your Buyers list. A day later or perhaps only a few hours, you get a phone call from the Buyer (let’s call them Bob) and it goes something like this:
You: Good afternoon Bob, how are you?
Bob: Doing well, yourself?
You: Doing well. How can I help you?
Bob: Well I got this deal here at 123 Main St that you sent me however I have gotten it from five other people and am trying to figure out who has it since they all have different prices. I am very interested but need to know who really has the contract so I am not wasting my time. Another gentleman called me and said he was under contract but it seemed odd since your price was lower yet he was adamant. You seemed like a nice fellow and your price is the lowest so I am starting with you. Is this your deal?
Read More >>
Since we don’t use banks, how do we fund our deals?
Do banks have money to lend? Think carefully – this could be a trick question! Don’t banks “borrow” the money they lend from their depositors? And why do depositors keep their money in the bank? Because it’s the safest place to keep it, right? But is it really?
What interest rate is your bank paying on savings these days – 0.3%? And what is the current rate of inflation…something like 4%?
Here’s a broad-brush picture to help you understand what’s really happening. You put $10,000 in the bank earning 0.3% interest. One year later, your nest egg has grown to a whopping $10,030. But let’s not forget about inflation. In reality, after you factor in inflation, the actual buying power of your $10,000 dropped by 3.7% to $9,630! What – you LOST money? Read More >>
Here is some news that might surprise you…
banks and hedge funds can actually make your business stronger, especially if you own property.
I can say this with confidence because I’ve been in this business for a long time, and I want to share with you what I know about the relationship between you and the banks:
Banks: Right now, banks are holding the prices up artificially, meaning that values are rising. Banks are pushing the limits of pricing. They are getting data on the best-selling styles, features, and geographic areas. They know which houses sell and rent the fastest. Remember: banks are in the real-estate business; a business makes money. Do not expect them to treat you like a friend.
Hedge Funds: According to The Wall Street Journal, hedge funds are gathering analytics on the type of housing that is in demand. Their information is so specific that they know which houses’ rents can be increased. They also control the home owner and rental market, making it clear which way you should go when you put a house under contract. Read More >>
All men are created equal. But not all states, as far as Real Estate IRA investors are concerned. This is especially true for those who hold rental property in their Real Estate IRAs. Naturally, every state tries to strike a balance between the rights of renters to privacy and stability and the property rights of landowners. And some states strike that balance in a way that is much friendlier to landlords than others.
The key issues are each states’ landlord-tenant laws, bankruptcy protection measures and overall friendliness to debtors vs. creditors, and property tax levels.
Arkansas is the only state in the country that does not recognize an implied warranty of habitability. This means that landlords have no obligation to maintain homes or make repairs. But the law forces tenants to pay rent, anyway. Most other states have at least some provision for rent withholding or partial payment in the event that the landlord does not ensure at least a functionally livable property.
Arkansas allows landlords to commence with eviction procedures once the tenant is just a single day late with rent. Read More >>
“Would you like to buy a home of your own,
but don’t have the big down payment or credit?”
Real estate is a vehicle that cannot only provide you big checks within a few days but also a monthly residual income and a big backend payday. It can retire you so you’ll never have to worry about what the government will pay you when you become a senior and don’t want to work anymore, and the best part is you can make a lot of the money tax-free using your Roth IRA.
The problem is most people believe it takes money and credit to buy real estate and that you need a license or experience. None of that is true. I’ve been teaching people how to buy and sell houses for over 30 years now and to this day I buy 4-6 per month without using any of my own money or credit with one part time assistant and a couple of virtual assistants to get all the work done. I literally spend less than five hours a month in the real estate business to manage this very profitable income stream. It is truly a full time income with a part time effort, which is the way I like all my businesses to produce and assume you do to. Read More >>
In my last article I told you how you might be able to wipe out virtually any mortgage through a TILA rescission. The idea of rescinding a loan using the Truth in Lending Act had been around for a while, but its viability in court was completely dependent upon the whims and prejudices of the individual judges hearing the cases. Well, the Supreme Court of the United States cleared all of that up with a unanimous decision that has cleared the way for TILA rescissions. As I explained last month, the opportunity is HUGE, but could our window be closing?
The decision as spelled out by Justice Scalia of the Supreme Court is extremely rigid. It says that a bank has 20 days from the time a notice of rescission is dropped in the mail to contest its validity. After that 20-day window is up, the note has been rescinded as an operation of law. The notice of rescission itself carries all of the power of a court order. No further proof or lawsuit is required from the borrower, and after the 20-day period, no arguments can be made by the bank. The bank must provide the cancelled promissory note, file a satisfaction of the mortgage, and pay back all of the money paid by the borrower. While collecting all of this will almost certainly require the borrower to file an enforcement action against the bank, the ruling allows for no deviation from the letter of the law. It no longer matters what a particular judge thinks of the law. Read More >>
“Currently computer graphics are used a great deal, but it can be excessive.”
~ Hayao Miyazaki
The other day, I was web-surfing while I waited for a program to download, and I came across a site that really caught my attention. In the upper right-hand corner, a big Jolly Roger pirate flag was waving. In the upper left-hand corner was a little animated dancing hamster. A tiny cartoon kitten ran across the bottom of the screen, and in the middle of the page fireworks burst out in an infinite loop. Then suddenly, my iPad started blasting "Whole Lotta Love" by Led Zeppelin. It was a full-blown spectacle!
I tried to scroll down the screen to find a “music off” button. But the screen went on and on… and on… and on. One very long screen with a black background and neon-colored type. No links, just text. And every few lines, new and even cheesier animation.
At this point, I was desperate to stop the music. So I backed out of the site so fast I still don’t know what it was advertising. A funeral home, I think. Or maybe socks. All I know is, I had to get out of there. Read More >>
Many people get into real estate, a few succeed, and others decide real estate is not for them. There are many roles a person can take on in real estate but being an investor requires the thickest skin. An investor faces rejection daily, is essentially profiting from other’s misfortune, and depending on the level of the investor, can be risking thousands of dollars.
As an investor, rejection sometimes comes as a simple NO and other times it comes with plenty of four letter words. Why does this happen? Well, you are or should be attempting to negotiate a purchase price low enough to make a profit. At the same time you must make sure you can validate the offer and can explain it to the seller. When you just give a seller an offer that investors give, the seller is usually quick to say NO. Many sellers do not look at their properties from an investment stand point but are emotionally tied to the property. This causes them to take an investor’s offer as an insult. When the seller takes an offer as a huge insult, the seller may do a number of things from hanging up to lecturing you about how the offer was so insulting, to yelling. This is where negotiation skills come in to play. You must have thick enough skin to let all this go and, if given the opportunity, explain the reasoning behind the offer. I have seen newbies and veteran investors both lose it, get into an argument, and as a result lose the deal. I have always said, “Lose your composure, lose the deal.” Read More >>
I first went online in 2003 and my first website sold over a million dollars of product. At one time, we were one of the most top ranked websites in the world. We actually had more traffic going to our website than Oprah had going to her website. (For you internet geeks out there, our Alexa ranking was a hair under 10,000 at the time)
Marketing has changed dramatically since those days. It is no longer good enough to be "found on Google." Your competitors are there too. Today, more than ever, people have a choice of who they choose to do business with and they want to do business with the LEADER or Authority in their field.
If you have a serious legal issue, you want the BEST Attorney that money can buy. If you are selling your home, you do not want just anybody selling your home.
The Million Dollar question is this:
If I were to visit your website or social media pages, how obvious would it be that YOU are the Number 1 choice? Read More >>
In many markets, properties are receiving multiple offers within days of being listed. This includes retail listings, foreclosures, short sales, etc. As long as the list price is remotely reasonable the properties are going into highest and best. This is not an ideal situation for investors because it means they may need to pay a higher price to be competitive. This can also be true for unlisted properties because all buyers, including retail buyers, are looking everywhere for their next purchase.
A solution to this problem can be solved by using wholetailing. What is wholetailing? It is selling a home for a price above the wholesale price but below the market retail price, maybe even at the market retail price in some cases. Typically these properties need mostly cosmetic or smaller, less serious repairs and/or updating. For this reason the seller is not willing to sell it at a wholesale price. As an investor you can close on the property at a discount, but not as low as a wholesale, and rehab it relatively fast. Once the property is ready you can advertise it at a profitable price below market retail value and get it sold fast if priced right. Some properties may need nothing more than just a deep cleaning. The targeted buyers are investors that may be looking for a rental property with minimal to no repairs and/or owner occupant buyers that are looking for a deal and not afraid of doing some sweat equity. This allows the investors to rent the property immediately to begin cash flowing ASAP. Owner occupant buyers already save thousands buying a wholetail property but they can also increase their equity if they decide to update or remodel the home to the property’s full potential. All these situations create a win-win all around. Read More >>
That sounds too good to be true! Guess who made this possible… The Supreme Court of the United States (SCOTUS)! There is a shockwave moving through the mortgage industry caused by a unanimous SCOTUS ruling in January. The court settled once and for all exactly what a borrower’s Right of Rescission is, and what latitude the courts have when dealing with it. The content of that ruling is a major win for homeowners and real estate investors alike, but what exactly does it mean for you and your business?
First let’s begin with what the Right of Rescission is. It was established by the federal government in the Truth in Lending Act (TILA). It gives a borrower the right to rescind any residential mortgage transaction within three days of the lender providing all of the disclosures required by TILA. The traditional Right of Rescission happens within 3 days of the closing and allows the buyer to cancel the transaction and get all funds returned by the lender. The Right of Rescission we are interested in is much more expansive. If the lender does not make the disclosures, or the borrower claims that the lender didn’t provide them, or the lender did not fully disclose the nature of the transaction, or the lender was fraudulent in their representation, the period can be extended up to three years after the borrower discovers the fraud. The bank must give up its claim to the property by providing the borrower with a cancelled note and mortgage and by returning every dollar the borrower has paid since inception of the loan. The lender has to respond within 20 days of the notice of rescission being dropped in the mail by the borrower. Read More >>