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Recently a friend of mine sent me a chart created by the United States census bureau showing the numbers of home ownership from 1965 until 2015. Amazingly the number of home ownership in 2015 was almost exactly the same as it was in 1965. I found this very interesting because throughout all of those years between 1965 and 2015 homeownership escalated slowly until 2006 when the real estate market crash took place because of all the defaulting loans. As house prices dramatically declined people felt their homes were worth less than what they owed so many people quit making their loan payments causing many of the defaulted loans people could no longer afford. I thought about what this chart represented for today’s real estate investors and I believe this chart shows us there is great opportunity for real estate investors of all kinds everywhere.

I am starting to see more and more new construction everywhere I travel and I am also seeing more and more deals completed by my students who are savvy investors all over this country. I’m an optimist, I truly believe that we are going to see huge profits made by those who step out of the traditional box and structure their deal differently than those who only do what everyone else is doing. I believe those of us who think different than the masses will prosper far more than the status quo. I am seeing the market slowly making a comeback from the disasters of 2008 for some of us but not those who are stuck in yesterday’s methods and mindset. Read More→

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The real beauty of owning rental property when the seller will allow you to pay them directly every month allows you to collect rent from each rental property you buy to pay for those properties.

The key to make this strategy work is to buy each income property so a tenant who will be renting the property will pay enough rent each month to cover 1/12th of the annual property taxes, 1/12th of the annual property insurance cost and at least 10% to 15% of the monthly rental income to cover the cost of the maintenance for that property when needed. This money for maintenance is set aside to pay for making the property look new when a tenant moves out such as new carpet, paint and any other damage to the property the tenant did during their stay. Also money for when the roof on that property eventually wears out, when the water heater eventually goes bad or the furnace or air conditioner breaks down and also enough money remaining each month to make the monthly payment to the seller and hopefully provide extra money each month for the owner to put into their pocket. Here is an example to show what I am talking about.

For this example each rental property brings in $1,000 in rent each month. This is the formula I use to determine if enough rent collected for each potential rental property to support itself and also provide extra income for the owner each month. Read More→

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Because money has been easy to get over the past 15 years I wanted to show you how leverage can truly maximize your profits regardless of your credit history. If you can think about the conservation of cash idea borrowing money from banks can definitely be a thing of the past. Leverage is one way how you can use the limited money you have in the most effective way to maximize your profit potential on every property you buy. If you have less than good credit or if you simply don’t want to use your credit you may want to learn how to use less money and with leverage maximize your profits. If you already have limited money you can use what money you currently have to buy one house but you will only profit or grow your money from that one house and nothing more when you rent or sell the property you bought. Leverage can accelerate how you build wealth if done correctly.

Here is a simple example of what I am talking about. For this example let’s say you have $100,000 you have worked hard to acquire over several months or years or you have the ability to borrow $100,000. One day you decide to buy a rental property. You quickly find a house you believe will be a good rental. The sellers of that house are asking $100,000 for their property. During your face-to-face discussions with the sellers you find they would be willing to allow you to make payments to them every month until the property is eventually paid for over the longest period of time you can get the sellers to agree to. Read More→

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Recently I was at an event and listened to one of the new real estate Gurus who was selling his software product he said would do everything you need to be successful buying real estate. He referred to his software as “Done for You”. He said it is the greatest thing since sliced bread. He said it would find the good deals, figure what you should pay for the property and what the repair costs will be for every property you look at without ever seeing the property. I was amazed how easy he made it sound. I couldn’t believe how many beginning investors in the audience fell for his pitch and bought his product for $997.00. I know we are in the computer age and I realize that the computer as well as our I-phones can be valuable and time saving tools in our real estate investing businesses. In the quest to simplify and broaden our profit potential tools like these can be helpful to find more opportunities.

I have seen software products presented that give the investor lists of different types of properties, their location, their price and comparables in the area. A system that helps the investor find money to fund their deals from a list of people who lend money. I have seen software that tells you how much you should pay for a property even if you haven’t seen the property. Good luck on that one. I have also seen different products that show you how to calculate repair costs from a data base of items from Home Depot and Lowes. I know for sure that there is no substitute for doing your own due diligence before buying any property and no software can adequately do that for you. Read More→

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Here we are already in the second month of what I believe is going to be a bumper year for real estate investors. For real estate investors who decide that they need to change the way they are trying to buy houses, many have little success without available affordable financing.

Did you see the movie Groundhog Day? In the movie events kept repeating themselves over and over. Today I am seeing this very same thing happening to real estate investors. Many investors today are still trying to do exactly what they did in the past and it still isn’t working for them. Most of these investors are getting what most of the other investors who lack the ability to borrow money are getting which isn’t very much. Many of these beginning investors are struggling to make little money, most are just going through the motions of what they were taught by some guru.

I just spent 5 days teaching with Robyn Thompson at her Junkers to Millions boot camp and I was amazed to hear her students who are totally unaware of any method of buying houses other than getting institutional financing to buy houses. I discussed this with most of her audience during my time at the boot camp and found that over 75% of those attending were unable to get any type of institutional financing for one reason or another. Does this sound familiar for you too? Read More→

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I’m very excited about the New Year and all of the possibilities I believe real estate investors will have the opportunity to take advantage of in 2015. Every New Year I sit down and write out my goals and needs for the coming year on my yellow pad. Once I have my goals written down for the year I then write a contract with myself setting forth what I promise myself and my family I will do this year to achieve my goals. For years I used to do a New Year’s resolution and I found that by the third week of the New Year my resolutions were already forgotten and I was just going through my days as I had always done in the past, sometime productive, sometimes not productive.

I don’t know about you, but when I give my word to someone in my mind I have just made a contract with that person. When I give my word, I will do whatever I can possibly do to keep my word to the other person. I want the other person to feel confident whatever I tell them they can believe in. I feel the same way about signing a contract. As with giving my word to someone, signing a contract to me is a very significant obligation I don’t take lightly whether to someone else or to myself. I started writing a contract with myself 20 plus years ago as what I promise myself I will do in the coming year. Some year’s life got in the way and I wasn’t able to fulfill my promises to myself even though I tried my best. Other year’s just because of the fact that I had the contract I could review every couple of months kept me on track to achieve what I had planned to do that year. Read More→

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This month I want to continue the line of thinking how sellers think differently than investors. Last month I talked about how sellers believe their property is worth top dollar even though many times they failed to keep the property in good condition.

Once you realize this will be what you will be facing when you first talk to most sellers you will have a better understanding of why sellers say the things they do when you ask them questions, such as “We Want ALL Cash” for our house.

You need to realize that the investor is trying to buy just another house they can make money with, while many sellers are selling a home that has emotional meaning to them if they live in the property. This difference of thoughts and emotion make a huge difference when you are negotiating. As I said before, this isn’t rocket science it’s just a fact of life. When you understand how sellers think you might have an easier time putting together a more profitable deal. By finding out what the seller’s true needs are, will give you a position of power when negotiating your deals. Remember, each seller has just one house to sell and you have thousands of houses to look at and choose from. This is why you are the one in the position of power when negotiating.

More than anything else you need to know why the seller is selling their house if you want to create a win-win deal. You truly are in control of each negotiation. You just don’t realize it. I concluded many years ago that I have lived many years without this seller’s house and if I am unsuccessful making a deal I will probably live out the rest of my life just fine without that house.

Here is a list of things you need to think about when talking to every seller. Read More→

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It took me years to understand that Sellers think differently than buyers. I know this sounds too idiotic to even discuss but from years of negotiating with sellers I can tell you that if you don’t understand how sellers think it will be impossible to negotiate profitable deals. Jimmy Napier told me years ago that we investors are trying to buy just “another house”, while the seller is selling a “Home”. Once I heard this it got me to thinking. It’s true; a seller has a different reason for the way they negotiate. This has changed how I negotiate and the techniques I use. I no longer believe that always offering CASH for every deal is the best offer to make.

Because I know there are as many ways to buy a property, as there are properties to buy I understand every seller has a different reason why they are selling and just getting all cash is NOT the only reason why they are selling their property. It will be your job to figure out what the seller really wants. While sitting at kitchen tables I have heard time after time what a seller really wants and money isn’t many sellers only motivation. Once they tell you what they want then hopefully you can then go on to solve the seller’s problem whatever it may be.

Over the years I have heard a myriad of reasons why each seller wants or needs to sell their house. Some needed to sell because the size of their family had grown and they have simply outgrown the house they have. Possibly I could sell them one of my other houses in exchange for the house they need to sell. Some sellers have reached retirement age and no longer need such a large house to take care of. Again, I might be able to sell them one of my houses or find them a house they would be happy with, buy it and exchange my house for their house. I call this “double dipping”. Some sellers may have had a job transfer and need to sell their house quickly because they are now making two house payments they can’t afford to make, the house they left and the house they are now living in. Some sellers may no longer be able to take care of the property because of their age or physical condition or, they can’t afford the monthly payments any longer. Some sellers may simply want to rid themselves of the large monthly payment they are paying and are having trouble making each month while trying to save their credit score. Some seller’s have back property taxes they can’t pay and their lender is threatening foreclosure if they don’t. You will never know what motivates the sellers until you ask. Read More→

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As many of you know I have taught hundreds of students over the years and I am constantly asked what the most important things a new real estate investor needs to know. First of all I believe every new investor needs to realize that if they plan to be successful and make money from the real estate they buy, they will find that every situation will require a different strategy and structure that they will need to learn if they wish to achieve their goals and dreams.

The key to make almost every deal work is not to “Buy High and Sell Low”, it’s how you structure the deal. Actually this has happened to me a few times over my 35 years as an investor, this IS NOT a good strategy to adopt but it shouldn’t mean you need to lose money. Over the years I have done two deals where I bought a property and because of circumstances beyond my control I was forced to sell those properties for less than what I paid for them. Even though I paid too much for those properties “over time” I made a nice profit on both of those deals.

Each of those properties I bought with seller financing terms and then sold each with seller financing terms. Even though I sold each property for less than what I paid for them I received a higher interest rate when selling than the interest rate I was paying to buy each property. I was able to make a nice profit on each. Read More→

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This is the final part of this article but it is not the end of the mistakes I have made negotiating with sellers through the years. I will continue to provide more negotiating ideas for every serious investor who realizes that negotiating directly with the seller is where the most money will be made.

  1. Being Inflexible – can you imagine a real estate genius like me passing on a deal just because the sellers and I were $500 apart on the price? Even at the higher price it was still a good deal for me but my pride and ego wouldn’t let me give in and do the deal because I wanted the deal to go my way and the sellers wanted the deal to go their way. I can’t believe I was that immature that I let a beautiful asset like that house slip away over $500. I have learned over the years, there is no place in this business for your pride or your ego. If you have negotiated a good deal get the deal closed and enjoy the benefits that property will give you and your family. Read More→

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Last month we discussed four of the major mistakes I made when I was learning to be a real estate investor setting at sellers kitchen tables trying to structure profitable deals to better provide for my family and the dumb things I did that cost me thousands and thousands of dollars over the years. This month I am sharing with you more of the things I did when I didn’t know what I was doing when negotiating. If you will learn from my mistakes it should take years off of your learning curve and help put thousands of dollars in your pocket every year.

  1. Sounding Like and Expert – this is a mistake I see all too many beginning investors make. Many years after I started buying houses, my mentor, Jimmy Napier told me to always be at or just below the sellers intelligent level if you want to be successful negotiating with them. Until I learned what Jimmy told me I would say the things I would hear from a seminar speaker that the sellers didn’t understand. This was not good. I found out that when you sound too smart many sellers get uneasy because they start to think that you could be getting ready to take advantage of them in some way. Never sound too smart when talking to the sellers. Read More→

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Jimmy Napier made the following quote and I truly believe these words are a key to create wealth in today’s real estate market.

Quote:  “You Make The Majority of Your Money In Real Estate During Your Negotiations”. 

Last month I made reference to what I believe will be the key to success for real estate investors in the event the economy tanks like the economist Harry S. Dent has recently predicted. As you may remember I talked about how every investor needs to learn how to talk to sellers face-to-face and negotiate profitable deals without thinking that all every seller wants is all CASH. Since then I have had much thought about things I have experienced through my career of over 35 years that were what I call “Deal Killers”.

If you want to be a successful real estate investor you need to not make the same mistakes I made when negotiating with sellers. For the first 20 years of my career I had no training of what to say and what not to say, I learned negotiating by just opening my mouth and saying what I thought every seller wanted to hear. I can’t tell you how many deals I screwed up just by saying the wrong things or by not asking the right questions. This article is about some of the things I have said and how those things were deal killers for me.  Read More→

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