Archive for October, 2014

The Fast Track to Failure

Posted on October 1, 2014 by

The quickest route I have seen many investors take to failure in the real estate investing business is by quitting before they ever have the chance to see their business succeed. Some obstacle comes along that just feels overwhelming and instead of forging on, they just say “I Quit”. Think about it, it’s easier to just quit than it is to forge ahead and solve the problem even when it’s not the easiest solution at the moment. It’s also easier to blame the market, blame your lack of education, or just adopt the “it doesn’t work where I live” kind of attitude than to take responsibility for the success or failure of your real estate business. I have heard “want to be” investors come up with every excuse imaginable not to get started in this very profitable business, and I have heard every excuse as to why it “just didn’t work for me”.

Believe me when I tell you, I have heard it all, and I feel sorry for the folks who adopt these attitudes. They are missing out on a wonderful opportunity to change their lives forever. If I had listened to that kind of negativity or thought so little of my personal abilities when I got started in this business, I wouldn’t be the wealthy entrepreneur I am today.

There are two critical moments when you must have faith in yourself and in your business; when you first begin your business and when your business is in some kind of trouble. It’s easier to be much more optimistic at the onset, it’s not so easy when you are overwhelmed, feeling like you are being pushed in several directions, or having trouble with cash flow. Sometimes quitting may look really attractive and your friends and family may suggest to you that you quit the real estate business and get a job if things aren’t going along just the way they should. Read More→

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I recently had a transaction wherein the Homeowner was attempting to use a Stated Income Loan Program which requires 1) that the property be purchased in a Limited Liability Company and 2) a 35% to 40% down payment. I was very concerned, yet excited about the Loan, due to the fact that these lenders are very picky and it was a new loan product for Investors. The mortgage broker that I was working with had “NO doubt” that this Buyer would be entitled to this loan, considering that he was giving such a large down payment.

Well … that is when it all started. After the appraisal was done, survey completed and the loan was being submitted to this Lender in St. Petersburg, Florida, all we were waiting for was the hazard insurance policy. However, the lender decided to use a program called CoreLogic which tracks if the Buyers currently have or previously had any outstanding mortgages and guess what? Yep, they did, and I was furious! This mortgage should have shown up on his credit report and when title work was pulled for a name search for the Buyer, we should have been notified that he owns another home. However, there was a HUGE lack of communication with the mortgage broker and the Buyer. The mortgage broker did not speak the native language of the Buyer. So … when the mortgage broker asked the Buyer “do you have any outstanding mortgages on any homes,” the Buyer replied “no.” However, they did say that the old mortgage they had on their personal house was “short-saled” and since the Bank wasn’t reporting it on their credit, the mortgage broker never mentioned it to anyone! This was a big mistake and costing the Sellers, the students and I, lots of time, money and effort to get this deal to happen. Read More→

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A high percentage of real estate investors and sellers begin their research on some of the popular websites like Realtor.com, Zillow, Trulia and Homes.com. Also, thousands of websites with aggregated data that provide bits and pieces of information might seem helpful.

For those of you already connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of houses as they come to market, against other less reliable sources continues to be a no brainer.

Today almost 90 percent of investors go to the web for information at some point during research, and, quite a few will possibly connect with a real estate agent during the buying or selling process. Only investing agents can actually offer and help to interpret the abundance of data and guide an investor or seller. Unfortunately, there are very few actual investing agents.

Anyone looking to buy or sell a home these days has more than likely surfed and discovered one of the many online home valuation tools. Every investor must ask themselves, are these tools really useful? Well, are they? Read More→

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Leveraging Investor

Posted on October 1, 2014 by

As mentioned before, real estate investors wear numerous hats and play plenty of roles in their business. If you know me, I am a very hard worker and take my business very seriously. However, any time you see/meet me I am usually in a great mood and in good spirits. People ask me what I do and when I mention being a real estate investor and agent they ask how come I’m not all wound up. My reply is I have a great team behind me that assists in leveraging everything in my business. The more you leverage the better off you will be.

The biggest questions are: How can you risk all that money on a home? What if after you close there are more problems than you expected? What if you cannot sell it? As investors we learn to evaluate a potential real estate investment but you do not want to spend time evaluating deals you may not have a good chance of acquiring. To prevent wasting time I have a team of agents, wholesalers, and bird dogs that I invested time in training to evaluate a deal the same way I do. Therefore, they are out submitting offers on my behalf and only contact me when a seller agrees to consider a price I would like. At this point, I schedule a time to meet the seller at the home and make sure my contractor meets us there as well. I let the contractor who already knows what I expect to look at the home while I get to know the seller. Once the contractor has finished putting his numbers together I ask the seller to give up a minute to discuss what the contractor just evaluated. Before coming to the property, I run a CMA and know what the property can be worth fully renovated, the contractor just told me the cost of renovation, and know I can calculate my offer. I present the cost of renovations to the seller to justify my offer. If the seller agrees I am ready with a contract at that moment. At this time, I now have a property under contract and a bid and the time I personally invested was about 2-3 hours. Of course, the contractor may have over looked a small item or two and there may be a hidden issue discovered during demo but there is always a miscellaneous number built into the budget for these items. Although this is an investment and there are risks, investing in real estate is a very calculated risk and the investment is tied to something tangible. If it does not sell fast I can always drop the price. I may not make as much as expected but you can’t hit a home run on every project. Read More→

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Many people present wholesaling as a great way to gain capital for investing in real estate. One of the toughest things about getting started investing in real estate is saving enough money to invest.   There are ways to invest with little money down, but you are still going to need some money to buy properties. Wholesaling may be a way to get started investing in real estate without much money. Wholesaling may not make you super rich, but it will teach you a lot about real estate investing and I think is a great place to start. For one, because that’s how I started, and two, I’m still doing it.

What is wholesaling real estate?

Wholesaling real estate involves an investor (“wholesaler”) buying a property or getting a property under contract and then selling the house or assigning the contract as quickly as possible. The investor may wholesale the property to another investor who will then fix up the property and rent it or flip it. The key to a successful wholesale deal is finding properties cheap enough where there is still room for a profit for the end buyer.

How can you find properties to wholesale?

I think a wholesaler’s biggest opportunity is to find off market properties. I call it the “Direct to Seller” method (no banks, no Realtors). Off market properties are houses that are not listed for sale, but are still for sale. The owners may be too far away, too busy, or too beat down to list the homes. The owners still want to sell the home, they just need the right person to find them and make an offer. Read More→

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“Dude… You Need Help!” (Part 1)

Posted on October 1, 2014 by

So there you are – a proud real estate investor or business owner! You’re doing some marketing, talking to sellers, driving out to meet them, making offers, following up, raising private money, selling your houses, and a million other things.

 Meanwhile, you’re (maybe) still working a job, being a husband, a father, a friend, a family member, a neighbor, and a member of your community! You don’t even know the meaning of the word “sleep!”

 You’ve got a lot of balls… In the air, and everything is going great with your juggling act.UNTIL… IT happens. What is it? “It” could be anything, like… you could get sick. Or someone in your family gets sick & needs you to take care of them. Or a deal goes sideways & winds up taking way more time than you had budgeted (inconceivable!). Or a vehicle breaks down. Or some technology doesn’t work the way it should (what? that never happens!). Or… shoot, just fill in the blank. IT doesn’t really matter what “it” is.

 Suddenly, your whole world gets turned upside down, and all your balls fall to the floor. The next few weeks find you frantically trying to put the pieces of the puzzle back in place again, only to find that the picture will never quite look the same no matter how hard you try to shove the pieces back together to where you had them. Read More→

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The Truth Can Run Around Naked!

Posted on October 1, 2014 by

David is a real estate investor from the Northeast. Many folks don’t know this, but “Northeast” is a Latin word that means: Where’d you get that Yankee accent? Honestly, even though I went to college up north, I only understood half of what came out of David’s mouth. Don’t know about you, but Yankee talk hurts my ears!

He came down to beautiful Dixie because he wanted me to watch him negotiate with sellers. The thing was, even though David has been reading our column, he wasn’t having much success working out win-win deals at sellers’ kitchen tables.

During our time together, we met with six sellers and made six written offers. By any measure, it was a successful day. One other important thing happened: By the time David finished making his second offer, I had discovered his problem…actually his two problems – and boy were they doozies! No wonder he was having trouble getting deals.

At the first seller’s house, when we got to the kitchen table, David talked about himself for twenty-five minutes. On and on he went – bragging about his greatness and business conquests. This first problem could easily be fixed with a roll of duct tape – also known as Alabama chrome! Read More→

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In the last four months alone we have negotiated 28 1st mortgages and have successfully negotiated at least a 35% discount in the mortgage balance on all 28! In addition, we have eliminated all of the 2nd and 3rd mortgages. We have been saying for years that the lenders have perpetrated significant fraud in virtually every mortgage written in the last 20 years. The media has led us to believe that the foreclosure disaster is coming to an end. They have even blamed the homeowners for causing the mortgage implosion.

It was almost eight years ago that the foreclosure crisis began. More than 5 million homes were lost to foreclosure during those eight years, many of them belonging to real estate investors who are no longer in business. But things are looking up, right? According to CoreLogic the national foreclosure rate is at 1.7%, down from 2.5% last year. The rate of foreclosure starts is at 2006 levels, and the number of foreclosed homes being sold is back to 2008 levels. So why are many analysts now preparing for those numbers to shoot back up in the next year?

The answer is simple. The government created a bunch of temporary relief programs to try to stop the onslaught of foreclosures without actually fixing the problem. Instead of focusing on principal reduction, they focused on temporarily reducing payments. Over 300,000 homeowners’ HAMP payments will increase next year alone, with 2 million set to increase over the next few years. 40% of those 2 million homes are still underwater. Read More→

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