Real Estate Investor Plus

How to Set Your Real Estate Investor Goals

2011-03-25T17:39:00.000-07:00

Effective goals are the key to being successful in the real estate business. Without goals, it’s like you are that hamster on the wheel or a ship without a rudder. Let’s face it. If you are planning a long car trip, you wouldn’t do it without either bringing a GPS with you or plotting your trip on a map. If you don’t know where you are going, how are you going to get there? Once you know where you are going, you have got to have a plan.

I went through elementary school, high school, and some college, but they never really taught me how to set goals. They told me I needed to set them, but was never taught how to.
In my opinion, in order to lead a truly full life you should have lots of money, a wonderful relationship with God, a great family life, and you should be healthy. Though note that nobody is perfect, including me.

As far as business goals are, only you can tell yourself how to set your goals. Here is how I set up my own goals. I set my business goals in two different ways. Income, (how much money I want coming in on a weekly, monthly, and yearly basis), and deals (how many deals I do). I look at my results in two different ways. I look at how many deals, and the average dollar amount per deal.
As far as personal goals, they can be relationship goals, family goals. Maybe you want to spend more time with your kids. Maybe you want to lose some weight. Whatever it might be, there are both personal and business goals to contend with.

To make a goal effective, it really needs to be written down. There was a study done at The Harvard School of business that was started some time ago. They had three groups: a group that had no real goals, a group that had goals, and a group that had goals and wrote them down. The group that had goals, made 2 to 3 times more money per year than the group that had no specific goals. The group that wrote their goals down, they made 10 or 15 times more money than the group that had no goals. So, it’s critically important that you write your goals down.
I’ve even heard of stories about people that wrote down a five-year plan, stuck it in a drawer somewhere, and never looked at it again until later, and were shocked that they had hit every goal on their list. So, write those goals down. Statistically, you are much more likely to hit your goals if you write them down.

Go ahead and search online for a goal setting template, or even make your own document up for yourself. I suggest you print it out and write it out. There is something about actually writing your goals down, that ingrains it in your subconscious.

Note that there is a difference between dreams and goals. That’s really what the difference is with writing them down. If you just have dreams in which some day you want to do this and some day you want to do that, it’s not really a goal, it’s just a dream. That is why the next step is that you need to make your goals very, very specific.

You don’t want to just say, “I want to be rich”. How rich? You don’t just want to say “I want to get a new car in the next year or so”. What kind of car? Go ahead and look at the cars right now. Put it in your mind and subconscious that that car is happening. Instead of having a goal that you will get a car in the next year, make it specific, right down to the year, make, and model. Don’t just say, “I want to make a lot of money or do a lot of deals in the next 12 months”. Make your goal specific, as in how many deals you want to do a month or how much you want to bring in a month.

Goals have to be measurable. You have to be able to measure exactly where you are in conjunction with your goals. As you are tracking your goals, you need to be able to see exactly where you are.

Goals also have to be believable. It’s one thing to say, “I want to do 10 deals a month”. If you’ve only done 2 deals in the last 12 months, saying you are going to do 10 deals a month might not be doable. You might fall behind and then not be able to believe that you will ever meet those goals. Also, remember that you can’t make your goals so easy that there is no challenge either. They have to be enough of a challenge that you have to work hard to get them, plus something that you believe. But, if they are too hard, you are going to lose faith that you can hit them and it will take the wind out of your sails. So, make sure they are believable and that you are going to stretch to reach them.

They also need to have a deadline; however you set it up, per month or per quarter. Per year, I think is too long. State a specific time line with a deadline written down. Your goals need to be measurable, believable, written down, specific, and they need to make you stretch. Every month your goals need to be a bit bigger.

And be honest with yourself. Reassess yourself as you go. I set my goals by month, but every 3 months I go and I see exactly where I am. At the end of 3 months, if I’ve hit my goals and I’m way ahead, I will adjust accordingly.

Another thing that I think is really important is that you tell others what your goals are. It’s just like writing them down. It’s going to put it into your subconscious a little more, to give you more chances, statistically, to hit your goals, by reminding yourself. You are also going to lose face. If I tell my Wife what I’m doing the next few months, and I don’t get anywhere near it, I’m going to be embarrassed. So, I feel it’s important to tell people what I’m going to do, even if they never say anything to you, or don’t care, you know that you told the world what you are going to do. You can even join a Real Estate Mastermind Group and tell them all what your goals are. Then they can hold you to it, because that’s what Mastermind Groups do for each other.

A good example of this is what happened to me the first year I joined a Mastermind Group. I went to a 3 day Mastermind Event that Summer and sat in the audience and set my goal to be a speaker at the event the next year. And not only did I set my goal to be a speaker, but I went on to the companies’ website that hosts the event and I posted that I was going to be a speaker the following year. It was actually posted on their message forum, and every other time I posted on their forum, I put under my name, “Speaker, Next Year’s Convention”. And guess what? I did speak next year at that convention.

Then what you want to do, once you have all of these processes going on, you want to do something to remind yourself of your goals. Go back once in awhile and take a look at the goals that you wrote down. Post something on the refrigerator to remind you of your goals. Several years ago, I ran a sales company and we had a goal board in my office. All of the people were paid on commission, so the better they did, the more money they made. I always encouraged them to bring in pictures of what they want. Be it a car, a vacation, a bracelet or something. I told them to bring in a picture and put it on that goal board so that every day, when you are sitting at that desk, you see that picture. I have my own goals posted at my desk. So, do something to continually remind yourself of your goals.

In conclusion, your goals need to be written down, specific, measurable, believable, set up a deadline for yourself, reassess your goals on a regular basis, be honest with yourself, and tell other people what your goals are. You will for sure be much more likely to hit those goals!

Subject-To DOES NOT Mean Mortgage Payments and Repairs!

2010-10-21T21:20:00.000-07:00

One of my viewers of the videos on my website sent me the following question and I’d like to address that here to share with everyone:

I live in Georgia and am moving to the Atlanta area to pursue that market as there are so many real estate opportunities there. I had a couple of questions and thought I would see what you said about them.

I have found several subject-to deals with TONS of equity. My long term strategy is buy and hold. I may do some flipping but I would probably reinvest the profits into buy and hold properties. If several of these subject to deals come through and they sign the papers all at once there will be no way for me to make all of the payments while making repairs or finding renters.

What would you do?

Is it possible to pull out equity from a property purchased subject to with say a HELOC or otherwise?

Sincerely,

Rich

This is what I would do:

One thing I DON’T do is sign a bunch of contracts and buy a bunch of houses sub-to and have all of these mortgage payments that I have to make. As a matter of fact, I rarely make any mortgage payments on sub-to’s while I’m waiting to find my tenant because I find my tenant BEFORE I close the deal.

I go into the sub-to deal saying, “Here’s what’s going to happen Mr. Seller, I’m confident that it’s going to work this way, but I’m not going to close until I find my sub-tenant, ready to move into the house.” Basically, it’s a standard sub-to contract. We go into the standard sub-to contract contingent upon us finding our buyer or tenant, or subject-to us finding our tenant or finding our buyer.

That way, I don’t make a single mortgage payment on that house until my guy has already paid me, has moved in, or is ready to move in. In a lot of cases, we get to keep the first mortgage payment and then the tenant starts making the second then third.

But in any case, put that contingency in your mortgage and the whole deal is contingent upon the buyer finding a suitable sub-tenant to occupy the property. That way, you get all of the paperwork done and you don’t close until you have the other guy ready to move in and you never have to make a mortgage payment while you are waiting to find your buyer.

Right now, the way the market is, you have a lot of buyers out there and lots of sub-to sellers out there. The sub-to sellers are desperate, and the sub-to buyers are plentiful. When I say “sub-to buyers”, don’t sell it to them sub-to, sell it to them lease with an option to purchase. That is the way I would do it, though note I am making a “Disclaimer” here. As you know there is more than one way to skin a house and more than one way to do this. Make sure you get the buyer lined up before you close the deal, if you can.

Now, if it’s a “home run” and it has $60,000 in equity, I’ll start making that mortgage payment yesterday to get my feet into that little house, because I know that house will make me a bundle. But, most sub-to houses don’t have as much equity as a retail flip.

Now, let me answer his question about repairs. I don’t make repairs on my subject-to houses. I let my tenants do it. Here is what I do. I ask my prospective tenants how much they have for an option fee or option deposit (which is similar to a deposit because it comes off of the price of the house) and whatever they say, here is what I say. If they have $6,000, I say: “You know, I was really looking for $12,000, but I can take the $6,000 as the option fee and get you into the house, if you are willing to take it without me putting in new carpet or paint and my fixing the bathtub. Because I was going to go in and fix that bathtub and put in new carpet and paint and I know I can get $12,000 up front from somebody else. But, if you are willing to take it in as-is condition, I’ll let you in with that $6,000”. And this works almost all of the time.

I have never had a house in which I had to do the repairs that I couldn’t fill otherwise. I have sold houses that looked really bad. Remember, these option people are so happy to get a house of their own, that they are willing to fix these things. And a lot of times, it’s not as bad in their eyes, compared to where they are coming from, as it might be in your eyes or a realtor.

So, make it contingent upon you finding your buyer, and now you don’t have to make any mortgage payments until they have taken over the house. Your buyer will come in, you’ll make your option fee, put it in your pocket, and you are off to the bank. Secondly, you won’t have to do the repairs because you are going to let your tenant do that.

Thirdly, as for asking if it’s possible to pull out equity from a property purchased subject- to, with say a home equity loan, or otherwise. I personally have never been able to put a home equity line on a subject-to house. I’ve never tried and I doubt I could do it.

Here’s what I do: Here is how I pull cash out of almost every subject-to house. I don’t want $5,000 or $6,000. I want to make $15,000 or $20,000. On almost every house I take subject-to, I borrow $10,000 from a private lender when I take over that house and I pay about 15% interest. I tell the lender that I just bought a house with a tenant in there. In a year or two from now, the tenant is going to buy the house from me. I would like to borrow $10,000 from you on that house and I will pay you 15% interest.

I know for some of you, it sounds like a huge amount. But, here is what I tell the lender. It’s a 15% flat interest per calendar year, no payments until I sell it off. So, he gives me $10,000 when I take that house subject-to. I now owe him $11,500. After one year, I’ll owe him $13,000. After two years, I owe him $14,500. I hope to cash it out before then, but I don’ really care. If it’s a good enough deal to take sub-to, and there’s enough equity in there, I don’t mind because I’d rather have that $10,000 up front and pay that $11,500 later or $13,000 later because I want that cash now.

Here’s what I suspect, Rich. I suspect that you are trying to borrow money off of these sub-to’s because you don’t have the money for the mortgage payments and make the repairs. If you follow the tips I’ve given you, you don’t need to borrow money on that sub-to house for mortgage payments and repairs! I hope this has helped you!

Persistence PAYS In Real Estate Investing

2010-08-27T21:43:00.000-07:00

Let’s talk about persistence, you know, the ability to keep going when things keep holding you back? Sometimes both new investors and old need a check-up from the neck-up. This business can be tough at times !

I don’t care what the guru’s tell you, this is not an easy business, though it’s simple sometimes. Once you do your first deal, it’s like the gates open and knowledge flows. The confidence from your first deal is what gets you going… but you need that confidence first.

Here’s a story I want to share with you about a miner:

Back in the gold rush days, there was a guy who wanted to be a gold miner, but didn’t want to do it alone. He wanted to hire a company and do it BIG TIME. He went out and got a loan, borrowed all kinds of money, put his life savings in it, hired some guys to go out there with picks and shovels, did tons of research to figure out where the gold is… and things got tough.

Days went on, and they dug and dug and dug and dug. They didn’t find any gold and things were looking gloomy and glum. Then, the guy got out. He backed out because he didn’t have any more money to pay his people and he couldn’t take it anymore. He finally said, “there’s no gold here!” and sold out. (I bet some of you are thinking the same thing right now in your real estate business)

He sold his business to in order to pay off his loans. Now, ANOTHER guy comes in who had a little bit more education and knowledge about the business. He put HIS guys to work, and literally, 3 feet away from where the other team stopped digging, they found one of the largest gold veins in California. This guy became mega-wealthy. Go ahead and look this up online and in the history books. It’s true!

You might be “this close” to your first deal. It takes only one deal to change your life! If you could do one deal tomorrow that could make you $20,000 to $30,000… or even $5,000… how much would it change YOUR life? It only takes one deal to make a difference. Now, you couldn’t retire after one deal, but it would allow you to pay off some of your bills, maybe take a nice vacation with your family. But, you have to be persistent!

I don’t know how many of you have been in jail swinging sledgehammers breaking those big boulders. (I wouldn’t want to try it) But, from what I have read, to break them, you have to hit them hundreds of times, without seeing as much as a tiny crack first. Then, all of a sudden, with one blow, it would crumble into many little pieces because it had been weakened from the inside out.

Business is Like Sometimes. You Have to take one more smack, one more blow

That is what this business is like sometimes. You have to take one more smack, one more blow. I know that some of you feel like you have been knocked around out there. Be persistent. Stick to your guns. This business works! If you want to work for yourself and you don’t have a bunch of money or good credit to go around, this is the business for you! Think about if you want to open a McDonald’s or Subway, it could cost you a quarter to half a million dollars, and then it could take years to break even.

To get into a business on your own, this is an easy business to get into. You don’t pay for it out of your pocket, but you do pay with stress and nerves at times. I know where you are at, I’ve been there. Rome wasn’t built in a day. But once you “get” this business, you’re able to do it over and over again. But… you have to have “stickability”!

In this business, you won’t get any worse with practice. If you’ve been in the business for a few months and have made a few offers, started your education, put out a few signs, or run some ads, you are not getting dumber or less smart in this business. Every time you fail, you take a step forward. (of course the shortest path to success is getting help and training)

I’ve known guys that have done deals for hundreds of thousands of dollars. Once you have the knowledge, the only difference is the amount of zeros on the paycheck. You do the same amount of work on a million dollar house as a $100,000 house. If you spend some money on training or bought a program or two, and put a lot of hours in it, and nothing has panned out, the only way it can go to waste is if you quit. Like I said before, it’s “stickability” and having the right attitude.

Let’s look at people who make big money. Real estate investors make big money. Athletes make big money. Actors make big money. Musicians make big money. Most of these actors and rock stars worked for $200 a week waitressing, cleaning, doing anything they had to do to put food on the table. Most of these actors and rock stars are “old” and that’s because they did gigs for $100 a night for ten years, before they became famous and successful. Most of them put years in first, while they whacked away at that stone, before they got that big break.

It’s the same thing in this business. Once you get that first deal, they are going to fall like bowling pins. That’s your big break… but don’t give up. Don’t be afraid to spend a little money to get some training. You have to be trained and have some support. You have to have someone you can go to for help. Go to your REIA, meet some people, and network. I do deals now that 4 or 5 years ago would fall apart, because when there was a problem, I didn’t know how to solve it. I learned that by “doing”!

I want to share a story with you:

In 1831, a man lost his job. In 1832, he was defeated in his run for Illinois State Legislator. He opened a business after that. A year later, in 1833, he failed and lost his business. In 1835, his sweetheart died. In 1836 he had a nervous breakdown. In 1838 he was defeated in another run for Illinois House Speaker. In 1843 he was defeated for the U.S. Congress. In 1846 he was elected to Congress, finally. In 1848 he lost. He was out. In 1849 he tried to become a Land Officer, he lost. In 1854 he tried to run for Senate and lost. In 1856 someone wanted him to be his Vice President, and he lost. In 1858, he again lost. Then, in 1860 Abraham Lincoln became President! This is Abraham Lincoln we are talking about. How many times did he whack away at that boulder to get where he wanted to go?

I too had to adapt recently. It’s all about education, learning, being persistent, and just keep going!

Did you know that Thomas Edison had about 1,000 ways that he failed while trying to get the light bulb to work? He always said he had 1,000 ways to make a light bulb. He only needed 1 way to make it work. But he was persistent. What if he didn’t keep on going?

So, be persistent! This business does work, and you can do it! Oh… and you can begin that training I talked about earlier by going to www.RealEstateInvestorOnline.com/vip .

Nick

How Do I Get Into Commercial Real Estate Investing?

2010-07-04T03:43:00.000-07:00

Know the Real Score of Commercial Real Estate Investing

First of all, commercial investing is not as hard as people think. There seems to be a stigma surrounding commercial investing. People think it's the big glass 100 million dollar buildings downtown. Sure, it is, but it's not always that. There are many different kinds of commercial investing that you can get into. You can start small and work your way up. It's not as hard as people think. It's not as hard to get funded, to find deals, and sometimes not as much work, once you have the deals.

Everyone that owns commercial properties are not like Donald Trump. They don't all have their own TV shows, aren't in the news, aren't in the casinos, own sports teams, and don't have the perfect woman on their arm. It's just real people that own most of the commercial properties out there. People like you and me. It's the guy next store. The guy that owns a few Dunkin Donuts stores. There are all types of commercial properties.

The Basic Facts About Commercial Investing

Let's talk about the basics. First off, what is commercial investing? When it houses a business, it's a commercial investment. Business parks, where it's one level, and there are many different buildings, those are commercial rented condos or business offices. It consists of office buildings in office parks. There are also industrial parks which look like office parks, but they are mostly blue collar businesses like manufacturers, warehouses, and storage places. This also includes strip malls where there are Starbucks, Dunkin Donuts, UPS stores, etc. It's one building, one- story tall that's broken off into many different stores. Then we have our indoor malls where there are hundreds of stores inside, which include an anchor store, which is the main store, like a Sears or Kohls to get your attention. There are also office condos which house doctors, offices too. Also, we have warehouses, and even apartment houses. These are considered recession-proof properties. Assisted living facilities are commercial properties as well. Let's not forget about land. People are buying land and putting a cell tower or antennae on the land and making money.

Best Things About Commercial Investing

One of the things about commercial investing is that once you own the property, it's easier to maintain it because most of the time, you will let the pros handle it.

One of the things about commercial investing is that once you own the property, it's easier to maintain it because most of the time, you will let the pros handle it. You will have a management team to handle the payments, as well as attorneys and accountants handling the day to day work. There will be less day to day work once you own that commercial property, versus a residential property. Let's face it. If you own one piece of property with tenants in there, you know how much work that is. If you have a few properties, it's even more work dealing with tenants not paying, collections, disappearing tenants, and cleaning it out and finding new tenants. It's a lot of work! Virtually, you can pretty much have the pros do it for you. You can hire a management team, attorney, and accountant. Properties generally throw off enough monthly cash flow so that you can have it all taken care of for you.

Anything you do with residential properties, you can do with commercial properties! You can buy and hold a house and rent it out, as well as a commercial property. You can wholesale it, get a contract on it, find someone to pay more, flip it, and step out of the deal. You never owned it. You get your finders' fee or spread, but instead of making $3,000 or $8,000, you can start making $50,000 to $200,000 just by flipping commercial deals. Just add another zero or two! Don't let it intimidate you!

Don't Let Commercial Investing Intimidate You

You can also lease commercial properties with the option to buy and make the big bucks!

All of the same techniques you can use with houses, you can use with commercial properties. Note that one of the main differences is how you get the value. For houses, we run comps. For commercial properties, we appraise it on how much cash it's throwing off. You can have two apartment buildings across the street from each other or in the same complex, and both apartment buildings can be identical. But, if one is 30% occupied and one is 70% occupied, and the first one is worth $700,000 and the next one worth 3 or 4 million, the only difference is how much it's occupied. How do you make big money fast in commercial investing? You find the one that is 30% occupied, find 5 or 6 tenants and bring it up to 70% occupied, and then you sell, get out of it, and make the spread. You can double or quadruple the cost or equity of commercial property by controlling it, filling it, and then getting out of it. It's a beautiful thing!

Don't let commercial investing intimidate you. Add a couple of zero's to the profit! Consider opening your mind about commercial investing. Start thinking big!

Don't Quit

2010-05-27T08:47:00.000-07:00

I want to share something that you "old-timers" might remember. Remember the old Timex watches? When we were kids, the big campaign was "Takes A Lickin, But Keeps on Tickin".

It's a good time to be in real estate, as long as you change your tactics. There are a lot of investors getting out of investing right now because they are trying to invest using old methods. They are doing what was taught 5 years ago, in the heyday when it was so easy to sell a house, find a buyer, and get people financed. It's not like that anymore!

Sometimes you see successful people and they are so successful and you wonder, "What makes me different from him? Why is he doing 6 deals a month? Why is he making the big money, when I've been out here struggling?" It took me a year before I got my first deal closed. There is only a little teeny tiny difference between successful and non-successful people. The difference is that the successful people don't quit and they keep on going. Think about it. If you put a successful and non-successful guy right next to each other, they look pretty much the same. We have the same amount of hours in a week. We have brown hair or we are bald, we're short or we're tall, we're fat or we're thin. There's really not much difference between successful people and unsuccessful people, except successful people have oodles of money, they have the big bucks!

The Only Time you Fail in this Business is When you Quit.

You wonder why. It's because they kept on going when things got tough. They didn't listen to people that were telling them that they can't do it. They didn't listen to people that told them it didn't work. Think about it. When you first decided to get into investing, I bet you that half or more of the people you told, especially the people you are close to, told you it wouldn't work, and that you should get a real job. Everybody "knows" someone who lost their butt in real estate, right? You hear the stories and I heard the stories too, from relatives. Don't listen to outside people.

Look at the people that are successful and keep on going. The ones that make it work just a little bit harder, maybe they did just a little bit more, that extra 2%, that extra 5%, that extra 10%. If you don't give up on yourself, it will make you rich. That's the difference. Don't give up on yourself.

Almost all investors struggle. We all do. I was in the business close to a year before I got a deal done. I just refused to give up. My Wife and other people told me to give up. It made perfect sense to give up, but I wouldn't. The difference is, is that I was too stubborn to quit. The only time you fail in this business is when you quit.

Real Estate A Good Place to Invest

I want to tell you about someone I know. He grew up in an average neighborhood in a lower-middle class family. He lost both of his parents due to cancer when he was young and essentially became an orphan. He dropped out of college because he was broke and had no money left to pay for his education, and found himself sleeping on the streets and living in $50 a week hooker and drug hotels. He finally got a job and went out and learned how to do something. He went into sales, opened his first business after copying what he learned in his first job, soon went out of business and lost his house to foreclosure and was then $150,000 in debt. He went out, got another job, got back on his feet, paid off his debts, quit his job, and opened another business because he didn't want to work for anybody else. He was soon after that hit by a truck and suffered severe injuries! He was prescribed Vicodin and as his pain got worse, and his tolerance got higher, the doctor prescribed him more Vicodin. He found himself terribly addicted to pain meds and found a way to buy them online. He soon had a 40-50 pill per day, $2,000 a week habit. He found a doctor that literally saved his life, and got him off of the Vicodin. Because of all of that, he lost the second business that he had opened and was now almost $200,000 in debt. He got a job back in the original industry that he was in 15 years earlier, discovered real estate investing, and is now a successful investor and coach! That's me folks!

Keep on Making Offers. Don't Quit!

You know, the successful people, you don't hear about them. They don't tell you all about their trials and tribulations. You look at them driving those fancy cars, living in those big houses, and traveling all over the world. They didn't just get there by magic. They worked for it, and they didn't quit.

What's the alternative? Work for 40 years for 40 hours a week and retire with a Kool-Aid party sometime in the future? Don't quit folks. I don't care how tough it's been or how much money you've spent. Keep on plugging. And if you are doing this business smart, you shouldn't be spending a lot of money! You should be putting in your time, but you don't have to spend a lot of money to do this business right. If you think you have spent too much money, you have been trained by the wrong people. So, if you are investing, keep on making offers. Don't Quit!

Keep Hanging

Keep hanging in there because the alternative is working for someone else for the rest of your life. You are either working for yourself and making yourself rich or happy, and coming and going as you please. Or, you are working for someone else and making them rich. There are very few industries where you can write your own ticket. It works if you are a famous actor, a great athlete, or writer. There are niches that you can work for someone else and make a boatload, but there's not a lot. Now, when I say "boatload", I don't mean to get a good job and make $80,000 or $90,000 a year. I mean $100,000 a MONTH money. You are not going to make that working for someone else. It's not going to happen! Don't Quit!

Overcoming Fear In Real Estate Investing

2010-03-20T23:49:00.000-07:00

This is for anyone who has ever had a little bit of fear keeping them from doing deals. Fear and faith are really the opposite and I want to delve into the psychology of investing and overcoming your fears so that you can take the steps forward that you need to. Nothing great is never easy and it always takes a leap of faith to accomplish something.

So, you investors out there who have never done a deal, this is for you. For those of you who know you know this business and have the tools and education to do this, this will help you too. Everybody has been there.

I sat next to a woman not too long ago at a real estate investing seminar and she told me that she had spent over $40,000 on her investing education. She had almost every book and tape available to her. She knew so much, she could teach ME the business! I asked her many questions and she knew her stuff. I asked her why she hadn’t bought a house and she told me it’s because she never had the opportunity. I asked her why she never put an ad in the paper, and her response was, “I was afraid that someone might call”. I said that that’s what we do, don’t let fear stop you! I told her she could write herself a script and if they call, she could follow the script, and she might end up buying a house. Her exact words then were, “I was afraid if I bought a house, I wouldn’t know how to get rid of it!”

If you have the education and you really want to do this business, but haven’t pulled the trigger, read on. Fear and faith are the opposites of one another. If you’ve got the faith that you are going to achieve with the fear that you won’t, it will always overlap. Deep down in your heart, you do believe you can do this, don’t you? If you didn’t believe you can do this, you wouldn’t be receiving this Newsletter, right? Would you spend the time learning about this business if you didn’t truly believe that you could do it?

Here are some tips to overcome fear:

Have a mentor. You don’t have to join a high-price coaching program to mentor you. Your mentor can be a real estate investor at your local real estate investor club that you struck a good chord with. Ask them if they mind if you give them a call once in awhile with a question or two. They probably won’t mind if you call them once a week and talk for 10 minutes.

Another way to handle it is through meeting someone in your area who is doing deals. Just let them know that you get deals coming across your desk, and you are not sure if they are good. Let them know that you are looking to do your first deal. Ask them if they mind if you give them a call to run it by them and maybe you can do the deal together and split it? Let them know you will do the work but you just need someone to run it by. A lot of investors will take you up on it and will even tell you they don’t need your money.

It could be a realtor that works with investors or even a landlord that owns a handful of houses or apartment buildings that has been around awhile. It could be a mortgage lender. Funding is a huge part of this business. Nobody knows the mortgage business more than a mortgage lender. The key is to get out there. Don’t sit in your office or sit in your living room thinking about all of the problems that could go wrong. You’ve got to network. If it wasn’t for networking, I wouldn’t be in the business. I went to as many real estate investment clubs as I could and I got to meet people, and slowly over time I all of a sudden knew the business. And you are always learning. You can’t be afraid to get out there, reach out, shake someone’s hand, and get to know them and ask some questions.

Another idea is a mastermind group with other members. There is nothing that has helped me more in my business is a mastermind group and talking to other investors. Sometimes you just need a pat on the back or a kick in the butt to get going so you are not so afraid. Don’t let fear overwhelm you!

The types of deals you can begin with are wholesale deals, bird-dogging, or option deals. There are no risks with these. With an option deal, you find a pretty house at a good price and get an option to buy it. You tell the Seller up front that you may never buy this house. Let them know you are getting an option on it so you can buy it if you want. Tell them the truth. Let them know that you are going to try to find someone else to buy it for a little bit more. Let them know that when you go to bed at night, that you are thinking about their house, and when you wake up in the morning, you’ll be thinking about their house. And you will also be thinking about their house in all of that awake time in between, looking for someone to buy your house from me when the time comes. Tell them not to get their hopes up too much. What is your risk? Maybe you will give them $50 or $100 as an option deposit. Again, what is your risk? Nothing! And you haven’t risked your integrity, because you told him up front that you might never buy the house. Same thing goes with a wholesale deal. If you are wholesaling, (typically we don’t tell the seller we are going to find someone else to buy it from us), but you could if you are afraid to go back to the seller and tell them you are not buying it. If you are dealing with the right sellers, they don’t care WHAT you told them, as long as you are trying to help them out with their problem. With wholesaling, what risk do you take? If you don’t find somebody to buy the house, you walk away from the deal.

What are you afraid of? Sometimes, “the only thing to fear is fear itself”. I know it’s an old adage, but it’s the truth. There is nothing to be afraid of.

Even with short sales, you have nothing to be afraid of. You are telling the seller up front that you are going to try to work with the bank to get it cheap enough so we can buy. Let them know up front that you can’t buy it if the bank doesn’t work with you. So, what have you got to lose? Don’t let that fear overwhelm you.

Do wholesale deals, option deals, short sales (which are a lot of work), or even bird-dog for other people. Be up front with people if you find a good deal.

Remember, everyone in this business got some help when they first started. One deal turns into two, two deals turn into three. But, you have to do that first one. Concentrate just on one type of deal then. I suggest not doing a sub-to or a rehab for your first deal, if you are nervous. Pick a wholesale or an option deal for your first one.

You can do this business! If I can do this, as well as a thousand other people, so can you! Turn your fear into faith. Wake up every morning and say, “Yes, I can!”.

To Learn more about real estate, watch videos, get free reports and more, go to: www.RealEstateInvestorPlus.com.

How Much Should I Offer On A Wholesale Real Estate Deal?

2009-11-13T21:09:00.000-08:00

First off, we are going to talk about wholesale deals. Wholesale deals are where people first cut their teeth in this business. They are the simplest deals. Basically, you find a deal and get some comps on the property. You will find out what other houses have sold for in the same neighborhood. It is public record, and you can find this out at your local courthouse. So, find the deal, get your comps, and make the offer. But, sometimes it’s reversed. Sometimes when you are talking to someone, you can make the verbal offer right then and there to get the deal going. Then after you make the offer and it is verbally accepted, you can come back and get your comps and check out what the real value is. It’s called due diligence. It’s like doing your homework and making sure you don’t get yourself in a hole. You need to do research at this point. Any deal without due diligence, comps, research, or checking things out can get you in big trouble. I suggest you make the offer first though, and get your numbers going so you don’t waste time on deals that never get anywhere.

In most cases, the seller is going to tell you what he is asking for. You don’t have to make an offer or counter-offer on that first call, especially if you are new to the business. If he says he wants $120,000, you don’t have to know right off the bat what it is worth, especially if you are not familiar with that area. There are some areas where I know right away, what the homes are worth. When you are new, that is not going to happen. So, don’t be afraid to accept the offer on the phone and let him know that you are going to do some homework, you are interested in the house, and will get back to him soon. So, find the deal, get the comps, make the offer, get the house under contract, find a buyer, and close. Note that we are not talking specifically about wholesaling here, but that is the gist of it.

We are going to discuss how to know what the right price is. What kind of offer should you make? That is where the ARV comes in. You have probably heard someone ask what the ARV is. The ARV is the Average Retail Value. It is how much those comps tell you how much the house is worth. Once you study the area and find out how much houses are selling for, you are going to get the comps. That is the ARV.

There are two ways to do this, assuming this home needs some repairs. Here is the first option: Let’s take the selling price of the house, $150,000 (which might be the ARV), and you are trying to come up with how much to offer for this house. You are not planning on buying it, but are planning on getting it under contract and selling it to someone else. You have to leave enough profit in there so that someone else can do the repairs, list the house or sell it without listing it, and make their profit back. They have to cover all of their expenses.

One way to do it is to take how much you figure that next person is going to sell it for, let’s say $150,000. Then, you subtract 4-6 months ,worth of mortgage payments that they will have to make while they are paying for that house, subtract funding fees (points), subtract repairs, subtract both sets of their closing costs, subtract taxes, subtract insurance, subtract utilities, etc. Am I confusing you yet? That is why I have a better system for you.

Here is your second option: What we do is we take the ARV in that area, of houses in good condition and subtract 30%. It is ARV minus 30%. Then you subtract how much the repairs are going to be. The rule of thumb is ARV (after the repairs or aka after repair value), minus 30%, minus repairs. Then you subtract how much profit you want to make on the deal. If it is a $150,000 house, don’t expect to make $30,000 or $40,000 on it. You have to leave the $30,000 for the guy who is going in and doing all of the work, making all of the repairs, plus making the mortgage payments. You are just wholesaling this. In my eyes, if you make $4,000, it’s a good deal. I have made $20,000 on homes like these in the past, but usually you are looking to make only $4,000 to $5,000. You are just flipping these.

To recap, you will take the ARV of $150,000 minus 30%. That leaves you with $105,000. Then you subtract the $20,000 in repairs. You are down to $85,000. If you want to make $5,000 in the deal, you are down to $80,000. I would then offer $79,000 to whomever I am buying it from. I would sell it for about $85,000 though.

The bottom line formula is this: After repair value, minus 30%, minus repairs, that‘s how much most rehabbers are looking for. A lot of them are looking for a specific profit, say $30,000. ARV is very universal. Good Luck!

Tenant Management In Real Estate Investing

2009-10-12T06:52:00.000-07:00

There are a couple of different types of investing niches that would have you with tenants. One would be long-term buys and holds, in which you buy property and put tenants in them. The other would be when you are buying houses for subject-to.

I’m going to let you learn from my mistakes. I’ve made them all with tenants, unfortunately. When I first got in the business, I bought a lot of houses subject-to, still have most of them, and am slowly selling off some of them.

First off, you want to do your homework when you are screening. When we sell subject-to, we buy the house subject to the mortgage. Somebody signs you over the house. They literally give you the house. You can live in it, or rent it out. But, make sure that you know your exit strategy before you enter the deal. The exit strategy is usually to lease with an option to buy, or Rent to Own. When you put this kind of tenant in there, they will give you a lump sum up front to move in. Don’t just charge them a security deposit. You want to get at least $4,000 or $5,000 from these folks as an option deposit, up front. This gives them the right to buy the property at any time. Basically, they are paying that up front to lock themselves in at that time, at that price

Sometimes, it’s tempting to take the person with the highest option deposit. Let’s say you have two people interested. One of them has $7,000 to put down, with terrible credit, have been evicted several times, and swear that they will pay their rent. But, the other one only has $4,000 and a spotless record. You might want to consider taking the person with the $4,000 with the spotless record, because that other $3,000 could be eaten up pretty fast with attorney fees, court fees, and a lack of mortgage payments if you have a deadbeat living in your home.

There are several different websites to choose from where you can get a lot of backround information on tenants before you have them in your home. The site that I use asks me to enter their name, last 2 or 3 places that they have lived, and social security number. Within a minute, I can find out if they have ever been evicted or have gone to court for lack of making payments. I have had people that I have run through on a website, and it would show that they have been evicted three times within a year. Screen your tenants.

You can also have a criminal background or retail credit check done as well. Please note that most tenants have bad credit. That’s why they are renting from you. They either don’t have a lot of money or have bad credit.

Get More Information about Your Tenants

You should also call and talk to their old landlord. A trick I use is this: If their old rent was $825 a month, I would call the old landlord and purposely give them a wrong dollar amount. I will tell them that I had a tenant of yours apply to rent a property of mine. I will tell them that they said they paid $875 month in rent. Then I will ask if that is correct. I want that landlord to come back to me and say, “No, they are paying $825 a month for rent”. I am doing that because I don’t know if they are really renting a house from these people. How do I know it’s not their Cousin, that they gave me their phone number for and have asked the Cousin to pretend to be a landlord? I might even screw up the address a little. I want to see that they know some things that they might have forgotten to tell their Cousin when they set the Cousin up to do this.

You also want to verify their employment. If they say they are working somewhere, call there! Most places, all they can do is verify information. You will say their name and how much they are making, and they can say “yes” or “no”. Usually they can tell you if they think the prospective tenant will be there for the next 24 months or so.

Another trick I use is to leave a piece of paper out of your screening, or forget something. Come up with some reason to drop by where they are living now, to ask a question or talk to them. You want to make sure they really live there. More importantly, you want to see the condition of that house. I can guarantee you that within 2 weeks, whatever condition their current home is, your place will look the same.

I have had people take a perfect house with new carpeting, painting, and everything clean and have had them turn it into a wreck in 6 weeks time. I have thrown tenants out after 6 or 7 weeks. One tenant left 2 to 3 feet of stuff on the floors in every room. There was mold on the walls because there was so much urine in the carpets. A neighbor told me they had 7 or 8 cats, 2 or 3 dogs, and a whole bunch of bunnies. The carpets were ruined and it took me several tries to find a company to come clean it. We also filled up a huge dumpster to clean it out. Be careful. Please go see what they live like. Also, don’t disappear after they move in. Drop by to say hello every now and then. Your contract should say that you should be able to inspect the house whenever you want to, with 24 hours notice. You might get a really good tenant that pays on time and you think they are sweethearts, but your home may be trashed. Please, go check it out.

You have to be careful and not discriminate, or ask how old they are. You can ask if they are over 21, though. You can’t discriminate due to age, sex, race, or religion, but you CAN discriminate due to their lying to you.

Also, be tough on these people, especially at first. Some are professionals at not paying their rent. They know the loopholes and the legal system. If it gets to be the 5^th of the month and you don’t have your rent, if you don’t have your rent, they should get a certified eviction notice on the 6^th. I know this because I was dumb and kind with my first tenant. I had a $2,200 a month mortgage payment, and her rent was $2,500. The first few months were good, but she was a mortgage broker, and when the mortgage industry fell apart, so did she. She would call and tell me about her problems and apologize and I would tell her how thankful I was that she was trying, etc. Before I knew it the 1^st came, the 15^th came, and she said she’s getting paid soon, and eventually, she was 6 months behind and I was Mr. Nice Guy, falling for her stories and lies. I finally had to go to court and evict her, and making all of the mortgage payments. As soon as they are late, you let them know that you are not fooling around.

Now, I tell people up front that as long as they make their payment on time, you will love me. I will be the best landlord they will ever have. I tell them if they don’t pay their rent, they will hate me and they will hate me fast. And I tell them that. I want to intimidate them a little bit. I will be a good landlord. If they need help with something, I will be there. If they want to buy the house, I will help them find a lender to get them into the home. I will bend over backwards for someone. That’s my property and they better take care of it! That’s the attitude you have to take up front. Let them know that you are not going to take “it” from them. If you send them their notice that they are going to be evicted, make sure you follow through in a few days, evict them when you say you will, even get a letter from a lawyer to them if they don’t leave. It’s a game with these folks, so you have to let them know you mean business. It will save you a lot of problems in the end. I have spent many sleepless nights wondering how the heck I’m going to get some bad tenants out of my property.

On another note, reward your good tenants. At Christmastime, why not give them a $50 gift certificate for Jewel or something, or even take a visit and look around and see what type of improvements you can make for them? If you have a 3 bedroom house with no ceiling fans in those bedrooms, why don’t you go ahead and tell them you are going to install some fans for them? They will love you for it. And if they love you, their chances of renewing that lease will increase for you! You want to keep them as your tenants as long as possible! Good Luck!

To Learn more about real estate, watch videos, get free reports and more, go to: www.RealEstateInvestorPlus.com

Staging Houses In Real Estate Investing

2009-09-24T04:31:00.000-07:00

Three years ago, houses were selling fast. Anyone could get a mortgage, and interest rates were low. Now interest rates are still low, but it’s hard to get a mortgage. So, you do have to take a little more time to sell your houses.

Now, there are some types of deals that you might want to stage, and some you might not have to. For example, wholesale deals where you sell to other investors, those you probably don’t have to stage as well. Of course, you do want to make them look good so it looks like it won’t need so much work. An experienced rehabber will know what he’s going to have to do, anyway, after walking through the house.

The houses I am talking about are the ones that you are selling to the public, a retail buyer who is going to move in and buy the house. If you have a house that you are putting up for auction, or you have a house that you have an option, doing a retail flip, or if you are a rehabber and you just renovated a house, and you want to make it look good to sell, you might as well make it look the best it can.

When you are staging a property, you always want to appeal to the senses. You want to make it smell, sound, look, and feel good. A home is a home. It has to be warm, comforting, and inviting.

First, let’s talk about what you see. The kitchen and bath are especially important to the ladies. Everybody knows that the kitchen and bath are usually what sells a property. Put some towels up, hang them on the racks, fold a towel and leave it out by the sink. Put some bowls or wooden spoons out on the stove. In my smaller properties, I leave a box of dishwasher cleaner on top of the dishwasher, put some detergent by the sink, make it look like you have taken the extra care to make sure the place is clean. Appeal to their senses in the kitchen. Decorate it a little bit so it’s not a big long empty countertop area. Maybe put a little rug in front of the sink, so it feels a little bit warmer. In the bathroom, do the same thing, put a little rug in front of the sink, as well in front of the bathtub. Hang a shower curtain as well, as well as putting towels in there. Also, make sure there is toilet paper on the roll. You can also put some handsoap and perhaps a cup on the sink. You want to make it look inviting.

On the front porch, it’s a good idea to put a welcome mat out, as well as a little throw rug in the foyer, perhaps. If there are sliding doors in the kitchen, it might be a good idea to put a throw rug in front of the doors.

As for the living areas, if you have a fireplace, it might be a good idea to put a picture frame on the mantle with the picture that comes with it. Fireplace tools are a good idea as well. It makes them imagine what it would be like with a nice warm fire going, while sipping a cup of tea. A fake plant or two by the fireplace or other living area space would be great as well. Buy some neutral rug runners and you can put them in a long hallway in the house. You don’t want them hearing an echo in a long hall. It sounds and looks better. If you have some extra pictures, hang some big pictures up as well.

In the bedrooms, I don’t do a lot, but here are some tips. For the kids’ rooms, you can find those rugs with kids’ designs on them, perhaps a basketball-type one for the boys’ room and leave a basketball there, or even go with a baseball theme. For a girls’ room, you can put a Disney princess-type rug down and place maybe a rocking chair with a little crown on it, it would really make it look inviting. And when the kids check out those rooms, they come out asking if this room can be theirs. You want them to assume what it would be like if they were living in their house.

As far as furniture goes, there are many options. You can go ahead and fill the whole house, if you like. You can go to Court Furniture or Aarons, as well. If you want to put a bed in the master bedroom, that would be great with throw pillows and end tables and a lamp. For the living room, you can put in a couch with a table and a lamp on either side with a matching chair is excellent. For the dining room, a table with 4 chairs and maybe some flowers in the middle, that would be great. I know it’s some extra work, but these companies will come out and set it all up for you. When you think about it, $499 or $500 a month is less than making additional mortgage payments. You want people to imagine what it would be like living there.

To make it sound better, you can also put a radio upstairs and downstairs with the same station on with some inviting music as they are walking through. During an Open House or when you know people are coming over, brew some coffee and perhaps make some cookies so it smells like home.

Open all of the blinds and turn on all of the lights so that it’s bright, airy, and open. If it’s a nice day, open the windows a bit so that they can hear the birds and nice outside noises. It helps to make a nice overall feel to the house.

To Learn more about real estate, watch videos, get free reports and more, go to: www.RealEstateInvestorPlus.com

How To Talk To Sellers In Real Estate Investing With Seller Financing

2009-08-24T06:25:00.000-07:00

Basic Sales Tactics that Work in Real Estate Investing

First off, there are some subliminal things you have to learn how to do. When I say subliminal, there are some basic sales tactics that work in any type of sales environment, especially in real estate.

One of them is association. You have to let your sellers know that people do this. This is a regular thing. It’s not this big unheard of thing for someone to sell with seller financing. If you have done this in the past, talk about this. Mention about doing this in the past. People also want to do what other people do. If they know other people are doing it, they will feel good about doing it. Let the seller know that people do this all of the time, lots of people do it, then they will be more likely to do it. Unfortunately, we have a herd mentality. A lot of times we have to see that someone else did something first, then we have permission to do it.

Also, you want to have some fear of loss, indirectly, in the tone of your voice. You want to make it sound like this is the only way you can do this deal. In a lot of cases, this is the truth, so you’re not lying to anybody. Let them know that. Be indifferent about it. You have to have an attitude about you that there are other houses you can buy, especially in this market. Make them feel that they are going to lose something if they don’t go ahead with the sale with you.

Offer the Seller with a Good Interest Rate

Now, let’s get into the topic itself. There are some things you can do to sway the seller into going your way. One of them is to offer them a good interest rate. In most of these cases, we are buying these houses, not for a long-term deal, maybe to have it for a couple of years with a lease-option tenant in it to pay it off, or just looking to buy it for a short period of time to fix it up and maybe sell it. Or perhaps, we are just looking to get it under contract to sell it to someone else. So, offer a nice interest rate. Offer an interest rate that makes it attractive to the seller to give you seller financing, to trust you. You are not going to have it that long. That extra 2, 3, or 4, percent is nothing. I’ll pay 15 or 20 percent interest if I have to if the deal is right, just to get the deal under my belt and make some money on it. If you are only going to make 3 or 4 payments on it, what’s the difference if you are paying 20 or 25 percent on it? It’s only going to be an extra couple of hundred dollars. If the deal is good enough to take, it’s good enough to take with a higher interest rate. Don’t make the mistake of financing at the same rates the banks give.

Offer the Seller with a Good Balloon on a Mortgage

Another tip for you if someone is uncomfortable is to offer them a balloon. A balloon on a mortgage means that the mortgage is going to be paid in full by a certain amount of time. So, a mortgage with a 3 year balloon guarantees the seller that in 3 years or sooner, we are going to pay that mortgage off and they will have all of their money. It also allows them to defer their taxes. If they sell their house today for cash, and they get their HUD, and they go to closing and they get that full amount, they are liable to pay taxes on the full amount of their profit. (Make sure your accountant double checks this for you on an individual basis). When they sell you the house with owner financing, they don’t have to pay taxes on the whole amount, because they don’t get the full amount. It allows them to defer their taxes for a year or two, or until you pay the loan off in full.

Also, they are acting as a bank. I have told sellers that the people that are making money in selling houses are usually the banks. I tell them that they will be in a position like a bank, and they will earn a lot of interest on their property. I add it up and tell them how much profit they will be making on the deal. For example, it’s a $200,000 house and I’m giving them 8% interest. That’s a $1,467 dollar a month payment. Let’s say I make that payment for 2 years. At the end of 2 years, on that $200,000 house, I’m going to owe about $197,000 or so. So, I will show him in a year, it equals $17,000 that I have paid him. If it takes me 2 years to pay you off, I will have given you $35,000 on your house, and I’m still going to owe you $197,000. Let him know that he will end up selling that house for $237,000 because of my monthly payments and the amount due at payoff. Not the original $200,000 on the contract. Explain that that is how the banks make their money. Point out to him the real dollars that he will be getting over a period of time.

On an interest-only loan, you will be giving them interest every month after month. At the end of the loan, you will still owe them the full amount. If it’s a $250,000 house and they are giving me an interest-only loan on the house, I still owe them $250,000 whenever I pay it off. So, everything I give them up- front is money in their pocket. Make sure you tell them that the whole payment every month goes right into their pocket no matter when I pay this off, I will STILL owe you the full amount of the loan.

It’s a good deal for a seller. And it’s the truth. That’s how the mortgage companies and banks make A LOT OF MONEY! That’s why some investors quit investing after a period of time when they put a million dollars in their accounts and become hard money lenders. They become private lenders and make a lot of money for NOTHING!

Go with Owner Financing

In a lot of cases, you will have a seller that will go with owner financing, but needs some money NOW. Point out to them that if you give them $20,000 now, and pay off the difference, they are going to have to pay taxes on that $20,000 (again, double-check with your accountant about this). Suggest this to them if the home is paid in full: So they can save money, they can instead go get a loan/mortgage on the house for $20,000. You can put that $20,000 in your pocket right now. I will then make the payments on that loan until we sell the house and I pay you off in full. And right now, you don’t have to pay taxes on that $20,000. This is a great way if they want some money now.

Here’s a tactic that works and will continue to work. Once you get a deal on seller financing for a house that is selling for $300,000 and it has a 5 year balloon, tell the seller that within 5 years or sooner I will pay you off. If in the near future, I have someone ready to buy that house, I’ll call the seller and tell them that you have some extra cash, offer to pay about $250,000 for that home RIGHT NOW. Guess what. That $250,000 today is better than $300,000 in 4 or 5 years, and you have just make $50,000! If they make a counter-offer for a little more, tell them you will think about it, wait a day or two, call back and accept their offer. There are lots of ways to make money in this business.

Just Make an Offer

The bottom line is: MAKE AN OFFER. You have to believe that people are going to accept your offers. Don’t think for a minute that just because maybe you don’t own your house outright, that a lot of other people don’t. I own a house outright. I can borrow money against it, I can rent it. In any case, make an offer. There are many people out there that own houses that are paid for, and they are just sitting there. Make the offer, look them in the eye, pitch them high, and watch them buy. Believe in yourself!

Free Ways To Build A Buyers List In Real Estate Investing

2009-08-24T06:23:00.001-07:00

There’s nothing in the real estate business that is better than getting a house under contract by sending out one e-mail or making a few phone calls and having that house sold in a few hours or a day or two.

There are different types of buyers’ lists that you might want to build. There are retail buyers’ lists when you are selling those pretty houses that you have an option on. There are also lease option buyers’ lists. But that isn’t what we are going to cover here. We are talking about how to build a wholesale buyers’ list so that when you get a contract on that junker down the road, that ugly house that you got a deal on, you have somebody to flip that house to quick.

There’s a lot of different ways to build a buyers list. Some that cost a lot of money. I will teach you how to do it for free.

Make your Own Website
First off, I do suggest that you have a website. It can be a one-page website that introduces you as a professional house buyer and seller. Many times I find houses that I can’t rehab myself. Therefore, I like to give others opportunities to buy these houses at a great price. I let them know on my website. They just fill in their information and it comes right back to you on your list. So, when you come up with a new property that you are selling, all you have to do is send out one e-mail that automatically goes to your whole list. I know that it costs some money, but doing it yourself is very inexpensive.
Online sources are a great way to get your list started using free classified websites. Every day, I would post an ad there saying you are selling houses. You will put “Wholesale Properties Available”, or something more creative on there. Maybe something like “The Other Guys Talk, We Walk the Walk”, or something flashy like that. How about “Are you a rehabber? Do you renovate houses for a living? We’ve got the deals”. Direct them to your site or a phone number. You want to do this at least a few times a week so people know that you have houses.

Take Advantage of Online Classified Ads
When you post on these classified sites, you want to use good keywords . You want to put lines in there like, “We Buy Houses”, “Handyman Special”, “Sell Houses Fast”, or “Fixer-Upper”, and you want to put the area you are working in so that when people put the location in and a keyword, your ad could pop right up! So many times I put a search in with the area and up comes a classified ad in the 2nd or 3rd item that pops up. So, go to the sites and let the world know that you sell houses and have the junkers and you have the ugly houses at the right price.

Remember, you are looking for investors who you can assign your contracts to, who will buy those houses from your Seller and you make the spread in between. Make sure your web address, e-mail address, and phone number in there.

Also, put in that ad that you buy houses too. You might have a homeowner or investor who is browsing online who hits that site, and they might have a house for sale. You should always put “We Buys Houses Too” in your ads. It could double the effectiveness of your ads.

Look for House for Sale in Newspapers

Here is the cheapest offline way to build your buyers list. Get the newspaper and go to the House For Sale section. If you see a house that says, “Just Rehabbed”, you know that’s it’s probably an investor who just rehabbed that house and is selling it.

When you are driving down the street and see a sign that says, “We Buy Houses”, go ahead and call them , introduce yourself as an investor in the area, ask them if they do buy houses. Explain that you are a wholesaler and that you get houses at a good price, and you are looking for other investors to take deals that you can’t handle yourself. Find out their price range or area they are working in. Ask them if you can send them properties via e-mail. Find out what type of properties they work with. Or go ahead and add them to your list anyway, because you never know if their needs will change.

Having a buyers’ list could make the difference between you taking a couple days to flip a house or a couple of weeks. Let them know that you also buy houses. Be honest with them and let them know exactly what you are doing. Don’t be dishonest because it could bite you back in the end. I have been let down in the past and will now no longer accept phone calls from some investors in my area. Don’t lie, be honest. Word gets around. Good luck!

How to Do A Short Sale in Real Estate Investing

2009-08-24T05:41:00.000-07:00

A short sale starts out like any other type of deal. It starts out by you just finding a property. In this case, we want to find a property that is in foreclosure. It should be a couple of months behind, maybe even 4 or 5 months behind.

One of the beauties of a short sale is that it lets us deal with numbers from our seller that are unrealistic. Any time that you can get an unrealistic edge in business, it’s a good thing. And when I say unrealistic, it’s because we are getting the bank to discount that property. So, if somebody has a property that is 4 or 5 or 6 months behind on their payments, the bank is ready to take that property back. They are ready to foreclose on it, they are ready to put it up in auction. In todays’ market, that house probably isn’t going to sell at auction and that bank is going to be stuck with another house. These banks own so many houses, they could make a small city if they picked them all up and put them in one place. In any case, these banks do not want these houses, they are overloaded with them, and it affects their ability to loan. The more houses they own, the less money they can lend.

So, find a property that is in foreclosure. Note that this isn’t a technique to use for someone to save a house. This is for someone that wants to move out of their house, are ready to move, and they don’t want that foreclosure on their record. They just want to get it sold and get out. They are willing to do whatever it takes to get out of that house. In most cases, they are willing to just sign the house over to the bank and give that house back.

We are going to then pursue a short sale. What happens is when the Seller agrees to sell the house to you (and you have to have a Contract to buy house), for whatever the best deal you can get from that bank is. So, for a $200,000 house, the Seller is not going sell it for $200,000. I would shoot for about $115,000 or $120,000. Nowadays, you want to go as close to 50% as you can, but it may be unrealistic in some instances. You really want to shoot low, though.

The houses that work the best for short sales are houses where there are 2 mortgages. And the bigger the 2^nd mortgage, the better. What happens, is if a house has 2 mortgages on it (let’s say a $200,000 house has a first mortgage for $150,000 and the second mortgage is for $50,000), when that first mortgage forecloses and takes that house back, that second mortgage for $50,000 goes away and the bank loses it altogether. So, the best prospects you can get for a short sale are when there is a high second mortgage on that house. That bank knows whey will get nothing if that house goes in foreclosure.

A house that needs some work is usually a little better too. The bank is going to take back a house, but they would rather take back a house that needs no more work. If it needs some work, you might have a better advantage.

If you are going to get a Contract to buy that house, the Seller has to be willing to sell it to you for what he owes, or what you can get from the bank. In a lot of cases, you don’t even put a price on that Contract. You get that Contract or the option to buy that house from the Seller, and you leave that blank. There is a clause in there that says that the Seller will sell the house for whatever the Buyer will negotiate with the bank. So, whatever the price the Buyer and bank accepts, that is what the Seller is willing to take for the house.

The seller then walks away with nothing. They don’t get anything. If the bank is going to take a loss on the house, they don’t want the Seller walking away with any cash. The Seller has to be ready to just walk away.

You have to have a Seller that is really ready to work with you. They have to provide a letter explaining why they can’t make payments. They also have to provide a short sale package of paperwork for the bank. The bank will want the last 2 years tax returns, last 2 months bank statements, and if they have a job, the last 2 paycheck stubs. The first time you go through this paperwork it might seem like a lot of work, but after you get that first $50,000 check the paperwork will seem like nothing.

Now you are going to negotiate with the bank. There is a department at the bank called the Loss Mitigation Department. They basically mitigate loss. They help to not have foreclosures. You will contact them and discuss this with them. Try to get the price down as low as you possibly can. These negotiations usually take a few months. They will try to get as much as they can and you try to get as little as you can. They might even tell you they don’t do short sales. Yes, they do. That’s why they have a department. Stick to your guns and act professional. Find a program to help you out.

While negotiating, you are going to start selling this house. Our preferred method is to do an auction or just put it up for sale with a Realtor, or do it yourself. We are going to offer a discount. We are not going to try to get the highest dollar we can. We got a sweet deal, we want to offer a sweet deal to a buyer that wants to move their family in. Our goal is to find that buyer before we settle with the bank.

Then we will do a double close. You will find your Buyer, the bank is going to take $120,000 for a $200,000 house, you will have the Buyer maybe pay you $160,000 or $165,000. Again, you have to learn the numbers and feel out your market. Then you do the double closing back to back, on the same day. The first closing is when you buy the property from the bank. Now, you own the property. The second closing is when you sell it to your buyer. You buy the property from the bank for $120,000, then 10 minutes later, you sell it to the other guy for $160,000 then you have a $40,000 check. There is more to it than that though, but it does get easier with time.

You might be wondering where you can get $120,000 to buy it from the bank? There are services that will do that. There are places that will lend you the money for one day, for as little as 3 or 4 percent. You borrow it for one day, (they don’t even check your credit), you buy it from the bank. The same day you sell it to the other guy, you keep the difference, and it’s a sweet deal for you. Good luck!

The basic steps to a short sale:

Find a property a few months behind, with foreclosure looming
Make an offer to buy the property for whatever the bank will accept
Complete the short sale package that the bank or the short sale negotiator you outsource to sends you
Negotiate with the banks “Loss Mitigation Department” and get the price lowered well below retail
Find a company to loan you the $ for ONE day, so you can buy the property
Set up a double closing at the title company
Close and buy the property from the bank
Immediately afterwards, close again and sell the property to your buyer
Cash the check for the difference between what you paid, and what you sold for

Real Estate Investing Phone Skills

2009-08-24T05:37:00.000-07:00

Learn the Basic Phone Skills in Real Estate Business

You have to learn great phone skills in this business if you want to get anywhere. I’m going to give you some good information, and I’m going to talk about telephone magic. There are certain things you want to do, certain things you don’t want to do, when you are talking to Sellers on the phone.

Put Them On Hold: The first time you are talking to a Seller, and sometimes they are very aggressive, asking too many questions, not letting you get a word in edgewise, and he’s trying to take control of the call, that kind of thing, there’s a little hold button on your phone, and if you don’t have a phone with a hold button, maybe you can switch over to the other line or just pretend they are on hold. Go ahead and put them on hold. If you get somebody that is asking too many questions, or questions that you aren’t ready to answer, just put them on hold. Every time you put them on hold, they will lose their train of thought. So, if they start asking you questions that you aren’t ready to talk about yet, and if you are still getting your info about the property or details of the sale, just say “excuse me” and put them on hold.

And then you come back and take off where you left off. It’s a way to take control of the call politely. For all they know, you have another call coming in and you can let them know that. But it is a good technique to use if you have someone that won’t let you get your point across. Or, they want to keep talking and talking and talking. If they keep talking, just put them on hold. It sounds silly, but try it. Once you get your timing down, it will help you take control of your calls.

Ask “Yes” Questions: Here’s another one: Ask “Yes” question before you ask a couple of tough questions. When you are on the phone, you want to get your potential seller in the habit of saying “yes”. One of the things they say about live sales is that when you are talking to someone, keep shaking your head “yes”. It gets them to subliminally keep thinking about “yes”. I have a Brett Favre bobblehead that reminds me of this. Ask “yes’ before tough question. At the beginning of the call, here’s a scenario to use: “Hi this is Nick ,can you hear me okay?” Then, the seller will answer, “Yes”. “Are you calling about the house you have for sale?” And then the seller will answer, “Yes”. Every time you know you’ve got a property and you have to ask a tough questions, like asking them to drop the price a little bit lower, get them to say “yes”, first. You just really want to get them in the habit of saying “yes”. It’s going to more likely make the call go in your direction.

Say “If” A Lot : Here are some examples of how to use the word “if”. “IF your property is one we decide to work with.” “IF your property is at the right price and my partner is interested in it .” “IF there are not too many repairs and it’s something we want put in our program.”

Especially with todays’ buyers market, there are so many deals out there, so many cheap houses out here, use the word “If’ a lot. You want your seller to be afraid you are going to say “No, I’m not interested”, and hang up the phone. You want them to really believe that they need you a lot more than you need them. And it’s true, we’re helping them out in a jam. By saying “If” a lot, it puts doubt in their mind that we are going to actually buy their property and help them out. It’s much less likelier for them to turn on their sales talk. You are not trying to convince them to sell, they need to be convincing you to buy. Once you get that atmosphere on that phone call, you will have a lot more successful calls.

Mirroring: You also want to use mirroring when you are talking to people on the phone. Mirroring. You want to reflect back to them the same personality that you sense they have. So, if you are talking to someone who is talking really fast and asking a lot of questions, you want to talk really fast and ask a lot of questions. If you talking to someone who is kind of old and they are talking very quiet and they are talking very softly and slowly, then you should talk very quietly and softly and slowly as well. If you are talking to someone who is talking kind of “street” and they are cussing a little bit, be careful, but you might want to cuss a little bit right along with them. People want to do business with people they feel are like them. People they have something in common with. Subliminally, if you mirror their personality and reflect it back to them, they are more likely going to want to work with you. They are going to like you and trust you more and you are going to get the deal over someone else.

Last Question Dropped: Why do I say “Last Question Dropped”? Whenever you are negotiating price, you talk about the price and get the rest of the details. This works best over the phone, although it can work at the home too. The main goal of your phone call is to get an appointment to go see the house. After you have asked about the price, you have asked if they can do any better, you have already talked price. One of the last things to do before you hang up that call is to try to get a couple more thousand dollars off. You have already talked price, you know what their bottom line is. “Okay, thank you very much, I’m going to discuss with my partners or I am going to do my homework and check the market in your area and I’ll get back to you soon. By the way, when I talked to my partner-can you cut off a couple thousand dollars if that the difference to us taking the deal or not? “ It’s a last-ditch pitch, I call it. Sometimes that last 10 second sentence will make you 2, 5, or 10 extra thousand bucks, just for flapping your lips-so don’t be afraid to say it.

Pet the Goldfish: Here’s what I mean by Pet The Goldfish. In conversation, different things come up. Maybe they will talk about their kids, or they’ll say they need to make the call quick because they have to pick up their daughter from ballet. Anything you can catch about their life, their personality, or family situations. Something personal about them, by talking on the phone, you want to bring it up. “Oh, your Son plays hockey, gosh my Son plays hockey too, or I used to play hockey”. Don’t go overboard and lie. It goes back to mirroring, creating rapport over the telephone.

Answer A Question With A Question: Another thing that’s really good in a lot of cases is to answer a question with a question. Sometimes, they are not giving you as much info as you want. You want to use techniques to make them talk more. So, they ask you a question and you repeat the question back to them. They say, “Would you be interested in a house that needs quite a bit of repairs?” And you say, ”Your house needs quite a bit of repairs?” And they keep talking. And they say, “What type of timeline are we on? Is this something that could be done fast?” And you say “Well, would you need us to get this done fast?” Or they say, “I’ve never heard of anybody doing a deal this way, don’t take it personally, but it sounds illegal. Is this alright”? And you say, ”Does this sound right to you? Why does it sound illegal ?” Ask the question back to them that they gave to you and you’ll get a lot more info on what they are thinking and their train of thought.

Return Calls: Another thing that is going to help you when you need to call someone back is to set a time to make that call. Make an appointment. Don’t just say “I’m going to talk to my partner and call you back”. Say, “Okay, I’ll talk to my partners, look at the area and see what the values are, and I’ll do my homework and research your property”, whatever that might be. Instead of saying “I’ll call you back tomorrow”, say, “I’ll call you back tomorrow at 3:15 in the afternoon, is that good”? Set that appointment. By setting an appointment, it makes you seem important, it makes your time seem valuable. Plus, if they have that appointment, if you ask them to write it down, you are more likely to get through to them. How hard do we work to get people back on the phone? We leave message after message, they call us and we’re not here, and we call them back. Don’t be afraid to set an appointment for a phone call at a specified time and date. It’s really important.

Other Deals: When you are talking to people, also talk about other deals you are doing. Talk about other properties you’ve bought and sold in the area. And don’t seem desperate. Seem like you don’t care if you get the deal. Again, it goes back to them trying to convince you to buy the property, more than you convincing them to give us the deal. Be indifferent, pretend like you don’t care at all. I know some of you are so desperate, you want that deal so bad. Air is not as important to you today as getting that deal. You can’t let THEM know that. If they sense any desperation over the phone, the deal’s dead. So you have to act like you don’t care, you have plenty of deals, there are all kinds of people calling you, you’re just picking and choosing the best. This way you’ll get the best deal, and you’ll more likely get them to do something less traditional, or differently than what they had planned.

I hope these are some great tips that you can use, I use them all of the time, I TEACH these to my people all of the time. Here are some tips to succeed and get the deal:

Take control by asking questions. The person asking the questions is the person in control.
”Mirror” the seller/prospect. If they are talking slow and quietly, or fast and loud, do the same.
Put the Seller on hold often if you feel they are trying to take control, or won’t let you talk.
Listen more than you talk!
Don’t be afraid of dead, “silent” spots. The seller may get more uncomfortable and give you more info.
Repeat a Seller’s statement back to him in the form of a question. He’ll elaborate.
Set a specific appointment time for a return call. Don’t just say “I’ll call tomorrow”.
So here are some goodies to make you a better investor. Now go make an offer!

How to Get Good Comps in Real Estate Investing

2009-08-24T05:34:00.000-07:00

There are some ways to figure out what price you should offer on your houses to get a deal, or to give someone else a deal. I will also show you how to maximize your investment.

Comps are basically the true value of a house. You can look at the price of houses for sale, but that doesn’t tell you the true value of a house. The true value of a house in an area is based on how much houses are SELLING for, not how much the houses are listed for.

So, if you look in a neighborhood, you may find houses listed at high prices. They don’t sell at those high prices. They get made offers, they also come down before they sell. It’s the selling price of the house you want to go by to make a decision on how much you want to get for your house, or how much you want to offer on your house. It’s also known as ARV (average retail value, or after repair value). The comps let you figure out what the ARV is.

Comps also need to be similar houses of a similar age, in the same location. Now, when I say the same location, you want them to be less than a mile away, the closer the better. You want them to be sold, if possible, less than 60, or even 30 days ago. With this volatile market, you really want to make sure that those comps are done on homes sold recently. So, the closer to your subject property and the more recent those homes were sold, the more accurate your comps are going to be.

Now, we’ll talk about where you can get your comps from. First off, you can get comps from a Realtor or the MLS. If you are a Realtor, you already know how to access them. If you are not a Realtor, you can befriend a Realtor, and usually for about $20 or $25, you can get a Realtor to run comps for you. Realtors are good for getting comps because they are professionally trained to do so. Note that sometimes when they are working with a Seller, they MIGHT want to bump their price up a little bit to maximize their commission. Sometimes they might even do it for free. It’s give and take, do them a favor, give them a listing now and then, you’ll find a Realtor that can do it. The problem is, a lot of Realtors, they won’t do it over and over again. They’ll do a couple, but they don’t want to be your source for comps. Sometimes you can need 5 or 6 a day.

You can also get comps online, but be leery. Some companies are good resources, they list sold house prices, but don’t trust them so much when it tells you how much your subject house is worth. You can use them to see how much houses sell for in your area, but when it comes to finding out how much your house is worth, I have seen as much as a $50,000 spread up and down. $50,000 low, to $50,000 high. Those online free sites are not very accurate, unfortunately. I suggest against that. The worst thing you want to do is buy a house for even as little as $15,000 more than what it is worth. Then, you will become a motivated seller, and you don’t want that.

You can also go to the courthouse, though it is tedious for only one comp. You can contact them and get all of the records for all of the homes that sold in one area and find out what they are selling for.

I personally use a service online that runs comps for me. I put the subject address in and it gives us all of the recent sales around there, it tells us how much they sold for, how much loans are for on present houses too. But, not everybody wants to pay for it. If you are a true investor, it’s worth paying for, because you want to sit down, push a few buttons, and get your comps. Please research these companies before signing up with them. Now, you can move on to make your offers and talking to sellers are buyers.

Now, how do you evaluate? It’s easy if all of the properties are the same where it’s the same model home over and over in the same subdivision. It makes it a lot easier that way. When you get a few of the sale prices, average them out, then you can figure out how much the house is worth. It’s real easy with condos because it’s the exact same unit, right across or down the hall. Make sure that the time is there. If three identical units sold 7, 9, and 11 months ago, they are not good comps. You have to adjust for the time in which the market changes for that period of time.

If they are different types of houses, you have to go by different things. You have to do more research. You have to look at the size of the houses, the age of the houses. If one house is 50 years old and one house is 5 years old, the value is different. You have to look at the condition of the houses. You have to look at the extras on the house. Maybe one house has a 3 car garage and one house has a 1 or a 2 car garage. One house has a pool. You have to adjust for that. If one house has a pool, that house is going to be worth more than the home without the pool.

In a lot of cases, you can ask your seller what they feel the house is worth, which is always high. Ask them how they came to that price. Maybe they will tell you that they had a Realtor who gave them a CMA. Always double-check on that. You always have to run comps. Never take a seller’s word for it. Always do your own research.

There is also a square footage method. Let’s say you have eight different comps for homes that are all different in a certain area. I toss out the top one, which is always a lot higher. I then also toss out the low one. Then, I figure out how much a square foot the other houses are selling for. I take the square footage, the selling price, do the math, and figure out how much per square foot each of those houses sold for. I write it down, then I average it out and that will give you a good idea. So, what you do is figure out the average price per square foot is for homes that sold recently in that area, and then you multiply that by the square footage of the house you are looking at. That will give you a relatively decent comp. Again, it’s not an exact science. It comes with a little bit of experience.

It also comes with learning the territory. A lot of you are working only in one area. But, there are certain parts of Chicago here, that you can tell me it’s a one-bedroom, one level garage in Country Club Hills, and I can tell you how much it is worth, then adjust it for condition. It’s because I have dealt with that area. But, if you are investing all over the country, or if you are in a big city, you have to run your comps. The easiest way for me is to use a service, instead of doing all of the square footage work.

Now, there are things that you have to look at, that you have to adjust for. Sometimes you have to throw out homes that sold for very low prices. You might have 8 or 10 houses all that sold within a twenty thousand dollar range and one that sold for thirty thousand less. You have to find out why it sold for thirty thousand less. Did it have a foundation problem? Was it a foreclosure or short sale? Right now, there are so many foreclosures and short sales going on, you have to be aware of that. When you look at your comp list and one or two homes look way high or way low, you either have to throw it out or you have to find out why. These foreclosures are lowering the prices in areas.

Now, when I am selling a house, this is what I do. When I have an appraiser come in, or when I’m pricing my house, I use the highest comps in the area. When I am buying a house or negotiating with a seller or I’m doing a BPO and that BPO Agent is coming in, and I’m going to give him some comps to help influence his BPO on a short sale, I’m going to give him the lower comps in the area and will tell him that we are basing our offer on these comps. So, use the higher comps when you are selling, use the lower comps when you are buying.

Once you have your comps and know the prices that houses are selling for, use these tips to evaluate them:

Only use sold house prices, never listed ones
Do not use these comps for properties over 4 units, those are commercial, and done differently
Try to use comps as close as possible to the subject, hopefully less than a mile, and closer
Comps should be as “fresh” as possible, 30 days old or less
Compare “apples to apples”, not 3 year old homes to 60 year old ones
If a property is priced substantially higher or lower than the rest, find out why
If the comps are extremely varied, figure out the square footage price for the area, and use that
Use high comps when you’re selling, and lower comps when you’re buying, in negotiations

How to Get Started in Real Estate Investing

2009-08-24T05:20:00.000-07:00

Let’s face it. If you’re reading this, you either ARE an investor, or want to get started investing in Real Estate, but SO many people, say SO many things… some is great advice, and some is “garbage”, so I’m going to try and get you off on the right foot!

There’s NO doubt about it… if you want to learn this business, you need to INVEST. The question… is “what” do I have to invest? No, it does “not” have to be MONEY!

As a new or beginning investor looking to make money fast with a real estate deal, you have to be educated, but there’s “More Than One Way to Skin a Cat”. (or flip a house!) If you have the financial resources, there’s nothing wrong with spending a few hundred for a program, paying a few thousand bucks and going to a bootcamp, or even spending bigger money to get an experienced real estate investing coach.

But the truth, is most rookie investors couldn’t even come CLOSE to forking out that kind of “jack”! I certainly know I couldn’t, when I got started! So how “do” you get started in real estate investing then?

Investing Time and Money

You have to invest either TIME, or MONEY, to become a creative real estate investor!

But before you do, decide what “niche” of investing you want to invest in! Do you want to be a house wholesaler? Want to learn how to do short sales? Are you into subject-to buying? Are you handy, and love to renovate or “rehab” houses? There’s dozens… or possibly hundreds of ways to earn and make money with creative real estate investing… even as a beginner!

Once you’ve “done your homework”, and know what type of investor you want to be “when you grow up”, then it’s time to get educated! If you have money to spend, get a GOOD training program from a good real estate trainer. For $300-$1000 you can get a program consisting of CD’s, DVD’s, manual, books, and other tools. If you have more to spend, you can attend a live “real estate bootcamp”, where for 2-5 days you can be personally trained. Even higher up the ladder, and more expensive, you can hire a coach, or real estate mentor.

If you’re like I was when I started in real estate investing (WAY in debt) you can start by reading everything on the web you can find about your niche.

Yes, at some point you’ll HAVE to spend some money to learn this business, but it can be kept to a bare minimum, and it shouldn’t “break the bank”. Save your pennies, and start off with a $300-$500 program. “It’s hard by the yard, but a cinch by the inch!”

Don’t be in a hurry… start carefully, and consider making $500-$600 by finding a “seasoned” investor a deal, and getting paid for it, as a “bird dog”. Put the money towards a $500-$800 training program, and do ONE deal. Put that money into a bootcamp or real estate investor seminar, and get the training you need. Good luck!