Archive for December, 2016

The Art of The Negotiation

Posted on December 5, 2016 by

Despite the obviously important role information gathering plays in the art of negotiations, very few people actually spend much time analyzing their seller’s situations or needs before jumping into the negotiating process. Even logical individuals who wouldn’t jump into a dangerous sport before learning more about it often jump into a deal where they could possibly lose thousands without first getting the information they needed in order to protect themselves from a disastrous result.

I always remind my students that they need to listen, ask appropriate questions, do their due diligence and determine what the seller’s real underlying needs are. Don’t be afraid to ask questions of your sellers in order to get the information you need to make the best deal possible. If you need clarification on some part of the negotiation, ask!

So why are investors so reluctant to ask questions? Part of it is fear and part of it is the unwillingness to admit they don’t know or don’t understand something. It used to cause me a great deal of discomfort to ask certain questions of sellers such as “how much is your mortgage balance?” That one question used to really make me choke. The main reason for this was uncertainty as to how the seller would react to my question. Even when a seller refuses to answer your question, you are still gathering important information about that seller, namely that they are not particularly motivated. Usually a truly motivated seller will answer whatever questions you have.  Read More→

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Working With Realtors

Posted on December 5, 2016 by

In my business model I need very motivated sellers. They need to be able to have a desire to sell at a reduced price and give me favorable terms. Most Realtors have been trained to only accept a cash deal (mortgage included), as there is no reason to do anything beyond this traditional method, especially if it is complicated financing that they don’t understand. So it is important to figure out how to work with a Realtor.  Here are some tips that I have found to be effective when working with Realtors:

  • Work with a Realtor that is accessible and follows through. Some are so busy that it might take too long to be able to communicate with them effectively. 
  • Once you are able to talk to the Realtor you will need to get some information: Is the seller motivated? What does the listing say that causes you to believe the seller is motivated? What does the owner owe? Will they consider owner financing? Most Realtors will not ask these questions because it doesn’t change the transaction (I believe they do in my business).

The Realtor’s sole job is to act as a fiduciary. The Realtor’s responsibility is to make the most commission for themselves, which has a benefit of making the maximum for the seller. The Realtor has no risk if either party makes a profit or loss. You see the conflict immediately between a Realtor and the investor. The goal of a Realtor is to get as much earnest money out of you as they possibly can. (Just like a wholesaler). This causes you to follow the money… your money. I was told by a mentor who was willing to walk from $5,000, if you do your due diligence and find the deal will lose more than your earnest money, then walk away. This was a big lesson for me.  Read More→

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Last month, we discussed QuickBooks’ report Preferences and The Report Center. We’ll look at report customization this month.

QuickBooks makes your bookkeeping faster, safer, and more accurate than what you could do using a manual system. Still, you may occasionally tire of your daily tasks. You want to know what all of these forms and records mean in terms of your overall financial health. You want to see reports.

The actual mechanics of creating reports in QuickBooks are fairly straightforward. You can go to the Report Center, make a selection, maybe change the date range, and voila! Your company’s related data appears in neat rows and columns.  Read More→

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An investor who has owned four rental properties for the past three years called me for help.  He was at his wits’ end.  Because he hated dealing with tenants so much, he was seriously considering dumping all of his rentals!  By the way, this is not an uncommon feeling for new, inexperienced, and under educated landlords to have.

When we met to discuss his situation, he let me hear a recording of a conversation he had had with a tenant a few days prior…and I use the word “conversation” with loosely.

The tenant consistently paid his rent six to ten days late.  This sent the landlord into orbit.  Over the phone, the landlord screamed at the tenant, “You are a liar, an idiot and you’re totally worthless!  Pack your crap and get out of my house right dang now!”  And from there, the landlord’s words really turned foul.  I felt sorry for the tenant and angry with the landlord for losing control.  Read More→

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Insuring Properties in Real Estate IRAs

Posted on December 5, 2016 by

Like all Americans, we were deeply saddened and distressed by the recent widespread flooding here in North Carolina and elsewhere in the Southeast. We know that beyond the property and investment losses, many people lost their homes, property and heirlooms that no insurance policy can replace. 

But torrential rains and flooding is an ever-present risk here in the southeast, America’s Hot Corner when it comes to hurricane and tropical storm activity and a place that certainly gets its share of ordinary thunderstorm and tornado activity as well, even apart from the tropical cyclone risk.

But according to industry sources, less than 10 percent of South Carolina homeowners carry flood insurance. That’s well below the national average of 14 percent, which is still distressingly low.  Read More→

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Many years ago one of my mentors told me that you can have a perfect property, (if there is such a thing), and turn it into the most horrible property with bad financing. Getting good financing is the secret to creating wealth from real estate. Let me give you an example.

Today I am seeing all too many inexperienced investors talk about using OPM, (other people’s money). Using other people’s money can be a good strategy in certain circumstances, but not in every situation you find. For instance, using hard money loans will only work on short turn around properties, or fix and sell retail properties that can be sold in a short period of time. Over the years I’ve seen all too many inexperienced investors who bought houses in lower socio-economic areas or areas where people who can’t qualify for a loan are forced to live. These investors borrow hard money at 12% to 15% with interest only payments at 50% to 65% loan to value (50% to 65% of the after repaired value of the property) that have short payback periods from 6 months to one year. The investors fix these houses then try to rent or sell them.  Read More→

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The chance to create new investments and take advantage of the real estate foreclosures in the market should be taken.  These are one of the most dependable long term investments you can make.  Buying properties after foreclosure using REIA comps is a method you can use to ensure you are given the best price for each and every property you review.

Buying real estate foreclosures is one of the main sources of income for many real estate investors. For starters, foreclosed properties have a high re-sale value that is guaranteed to earn you tremendous profits in the long run. Especially if you know you have made your profit when you buy.  Another benefit of buying foreclosed properties is they are sold at the lowest prices, and with affordable interest rates dominating the market, those factors combined, you’re buying property at discounted prices.

Those interested in investing in properties for the first time may find it difficult to make a decision on what is really right as an investment. You will want the best available in your most desired location, because purchasing properties is a big investment. That’s why you want to work with REIA Comps for the most up to date information.  Read More→

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