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The Profit Newsletter - August 2015The August 2015 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on August 3rd with Vena Jones-Cox. There are 52 pages of valuable information this month for your real estate investing success. Download it and check it out! The Profit is Atlanta REIA’s digital, interactive newsletter for serious real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices. Many of the articles and ads in The Profit contain many hyperlinks you can click to get more information online! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer. Be sure to Subscribe to The Profit by Email or Subscribe to The Profit by Text so you don’t miss a single issue.

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Vena Jones-CoxIf you’re like most people, you’ve been wondering all along when we were going to discuss all the awful things you’re imagining might happen to you as a wholesaler. And I have no desire to sugar-coat things for you, but the truth is most of the things you’re imagining are extremely rare, and easily overcome. Here are some of the most frequently asked questions about such fears:

What happens if I can’t find a buyer for a property I have under contract?

If you can’t find a buyer, one of three things has happened:

  • You’ve made a bad deal, in which case your buyers have certainly made you aware of this or;
  • you haven’t marketed the deal hard enough to get the right buyer or;
  • you haven’t given yourself enough time to get your buyers into the property before your inspection or partner approval clause runs out.

As you’re probably already aware, any of these 3 failures is unlikely to harm YOU, if you exercised the recommended inspection clause. You’ll simply void the contract under that clause, or renegotiate for a lower price or more time, or in a worst case scenario, let the seller keep any earnest money as per the liquidated damages clause.

In the first case, you might try renegotiating the contract price or option price—you’ll know what to re-offer after you’ve shown the property to 4-5 people. In the other two cases, if you’re certain that you’ve created a good deal, you might consider paying the seller an additional, non-refundable option fee or deposit to extend the period of the contingency and closing. A third possibility is to buy the property yourself, although that is outside the scope of this course. Remember, as long as you have a liquidated damages clause, you’ll lose only your earnest money; if the property is controlled via an option to buy, you’ll only lose your option fee for not closing. But don’t make it a habit.

In any case, it’s important, as an ethical wholesaler, that you let the seller know as soon as possible that something has gone awry, and that you won’t be closing as promised. Read More→

Flyp My Phone

Posted on August 1, 2015 by

“The secret to multitasking is that it isn’t actually multitasking. It’s just extreme focus and organization.” ~ Joss Whedon

Have you ever watched a really good store manager while she works? It’s incredible! She can handle two or three customers at once, answer the phone three times while she’s at it, and approve a couple check transactions at the same time. And when you compliment her on her talent, she just shrugs and says, “I’m a multitasker.”

A few years ago, businesses were all about multitasking. Employers wanted people who could multitask. With life moving faster all the time, all of us have learned to do it to some extent. But experts now believe that multitasking isn’t really all that productive or efficient. For a lot of us, multitasking just means we do a bunch of things at once, but we don’t do any of them very well. I don’t know about you, but I’ll never be able to do what that store manager does.

So it turns out that it’s better to focus on one thing at a time. But this doesn’t fit too well with modern life. Between home, work, school, church, and hockey, it’s a wonder we ever get anything done at all.

Luckily, I don’t have to multitask anymore, because my cellphone does it for me. I can hardly remember anymore what life was like before I had an iPhone. I used to say that having a cellphone was a good idea, but not an absolute necessity. Well, it’s sure a necessity now. Read More→

The rental business can be very lucrative for the real estate investor. It can also be a pain in the neck. The trick to an effective rental business is the management. We have many rentals as a part of our real estate investment business and we have always said that managing tenants is like raising another set of children unless you do it correctly.

The first thing you should do is to decide if you are going to manage your properties yourself or if you are going to have someone else do it for you. There are ways to automate these systems either way and I will discuss both. You just need to choose the system that works the best for your own needs.

You can use a property management company and run your rental business pretty much hands-off. Just remember that there are costs involved in doing it this way and you don’t have as much control. If you do choose to work with a property management company check references before doing so. In the beginning, keep a closer tab on what’s going on with your properties. Some property management companies are definitely better than others and some will take better care of your properties than others.

When using a property management company who is going to place tenants in your properties, make sure they are using a reputable tenant check company and make sure you look at the applications and tenant check reports of prospective tenants before they are placed in your property until you are sure that you and the management company are “on the same page” regarding the tenant requirements you want for your properties. Make sure your property management company understands your personal parameters when placing tenants in your properties. Read More→

You may have heard the news that the real estate market is improving throughout the USA. While in some areas, the market improvement is steady, some markets are just hot! An interesting observation we have noticed is that private sellers in particular hear the news on Fox, CNN, CBS, etc. and immediately think their property is worth what it was in 2007 at the peak. The idea of gradual appreciation seems to escape a significant number of them as it seems at every corner everyone is saying sell! Even banks are selling REO’s at or near full retail value…before rehab!

In the midst of this, you may be hearing the phrase ‘limited inventory’ or ‘fierce competition’. And depending on your market, there is probably some truth to this. More agents are coming back on the scene. Real Estate gurus are selling Wholesale courses like M&M’s at the grocery store about how easy it is to be rich tomorrow. They all have some kind of ‘secret’ message to get deals flowing in to everyone. However, if you sell it to everyone, how is it a secret at that point?

So what is a wholesaler to do? Read More→

Receiving Payments in QuickBooks

Posted on August 1, 2015 by

It’s probably one of your favorite QuickBooks activities. Be sure you understand the mechanics of recording payments.

There are numerous ways to prioritize your workday. Do the most difficult things first. Get important phone calls out of the way. Respond to various emails.

But it’s likely that one activity takes precedence when you see that it needs to be done: recording payments. While you’re probably very careful with this process, it’s critical that your actions here are accurate. If they’re not, you could either lose money that you’ve earned or anger tenants by requesting payments they’ve already made.

QuickBooks comes with some helpful pre-defined payment types; however, you also have the flexibility to edit that list and add new types. To see your list, open the Lists menu and select Customer & Vendor Profile Lists, then Payment Method List. This window opens: Read More→

Setting the RIGHT Goals

Posted on August 1, 2015 by

Improper goal setting can really hurt your business. Proper goal setting can make you rich. This is a concept that I see most new investors and real estate business owners learn the hard way. If you don’t know how to set proper goals for yourself then you are very unlikely to obtain any goal. In this article I will help you to learn the art of goal setting.

Whenever I begin mentoring a new student or business client I always start by having them submit their goals. I am actually more interested to see how this person sets goals more than the goals themselves. Most people will set goals based on what they want with little knowledge of what it takes to accomplish those goals. Understanding the requirements of the goals we set will greatly help us achieve them.

I follow a similar process for goal setting that the U.S. military follows. It’s called “Backward Planning Process”. Basically I decide where I want to be. What is my end goal? Once I know exactly where I am trying to go, I work backwards from that point. For example if I want to buy an apartment complex I start working backward with questions like this… Read More→

Mailing for Dollars

Posted on August 1, 2015 by

My students always ask me “How many letters do we have to mail in order to get a deal?” Before I answer, I want to state that the #1 reason a Seller sells their house for less is because they are motivated. An unmotivated Seller will not take less for their house, as they are not in a hurry to sell. Let me clarify the situations that make a Seller motivated:

  1. Property is upside down – they owe more than it is worth.
  2. Property taxes have increased and they can’t afford to pay them.
  3. Mortgage interest rate(s) adjusted to a higher payment that they cannot afford.
  4. Job Relocation and they can’t sell the house fast enough.
  5. Divorce or Separation will send individuals into foreclosure because they depended on two incomes.
  6. Job loss or reduction in their income.
  7. Bankruptcy – For most people who are upside down on their bills, it also includes their house payment. It is important to know whether or not your Seller is in bankruptcy or planning on it. No transfer of a property can be done while the Seller is in bankruptcy.
  8. Retirement causes a reduction in income.
  9. Insurance rates have been increased and they can’t afford the insurance.
  10. Illness, Permanent Disability or the Death of Spouse/Family Member causes individuals to get behind on their payments.
  11. Exhausted Landlords – Most of the time, the Landlords had great credit but the Tenants won’t pay and the Landlord may have used up all of their financial reserves.
  12. Economic and Functional Obsolescence The Seller may own a residential property, but it’s located in a commercial district. The floor plan of the house is old and chopped up.
  13. Business or Partnerships failing
  14. Vacant House

Read More→

I’ve been in a few businesses in my life, still have a few and probably will until I check into the nursing home, and maybe even after.

When comparing buying and selling houses to other businesses, the contrast is so big, sometimes I wonder what the world would be like if all small business owners were exposed to my training before they opened their businesses.

Let’s take a look and compare to my restaurant.

You can start real estate immediately with no money, no credit and no risk and expect to make a profit within the first month or two.

The restaurant required several months looking for a location I had to build out. Then, I signed a long lease with a $7,500 deposit (albeit non-recourse). Then it took 10 months and several hundred thousand dollars to get it opened and a massive amount of my time. As to the profit…it’s been a serious negative and will take many more months to break even. Then we’ll discuss a profit, maybe.

Your real estate business has no employees, only a virtual assistant or two. That means no payroll alligator to suck you dry and no employees to manage or account for and no regulations strangling the life out of your business. Read More→

All good real estate investors know the valuation of their deals is key to insuring success and projected profits. Since late 2013 transactions in numerous market areas have seen strong sales activity. But what to do when transactions start to slow? All the market areas covered by REIComps, insure when sales changes happen you are not caught off guard.

Last week, we began seeing a number of Support Tickets asking the question, “My retail sale properties aren’t getting multiple offers any more. What am I doing wrong? Equally, we have seen tickets which ask, “Several of our current units for sale in the same area where they have sold in less than two weeks aren’t getting showings”.

Truly, essentially these are the same question, but we had to dig deeper from a valuation perspective. Remember, when we “buy right” typically we can drive the market selling slightly lower. Or in some cases due to sound acquisition, an investor is able to improve a dwelling insuring that buyers can’t wait to make an offer. Read More→

How Many Leads Do You Need?

Posted on August 1, 2015 by

How many times does your phone need to ring to make a deal? Well, the more rings you have, the more possibilities there are, right? But here is the catch: you don’t want just any calls. You want quality calls. It doesn’t matter how many calls you get if they aren’t ones that are going to lead to getting paid.

You may have heard real estate gurus telling you how to get that phone to ring. But I can show you how to get the phone to ring so that when you answer, you’ll have a potential good deal on the other end.

First, quality calls will decrease your overhead. I typically spend $1000 per closing on marketing. In the past, I bought the latest in high tech products which were supposed to send me 10 leads per day. The problem was that, while the leads were plentiful, the number that actually worked was less than I wanted.

You see, I want to make the time that I spend worth it. I want sellers who call me so ready to sell that I can barely finish saying, “Hi, this is Russ. How may I help you?” And I want them to say, ” I heard you were the best in the Atlanta area, you pay a fair price, you are respectful, and you do what you say you are going to do. I don’t care what you offer me, I will take it because I know you will be fair. I know you can close in 30 days. I trust you.”

How can YOU get these kinds of calls? I’m about to tell you. Read More→

This month I believe what I will be sharing with you can be very important to you financially as well as to build your financial freedom faster and easier. Last month I questioned why all of the so-called Guru’s are pitching how everyone should be wholesaling properties to build wealth. From my own experience as I said last month, if all you do is wholesale deals you have a job. This month I want to explain what I have experienced over the years doing this type of deal and what I have learned that keeps my buyers clamoring for more deals on a continual basis. The reason I decided to write about this subject is because without the practical knowledge of how to structure your wholesale deals, it is going to be more difficult to pass those deals along to other investors. I hope this information will open your eyes to the real world and what it takes to be more profitable.

Last month I left off by saying, if you always pay too much for the properties you wholesale, the seasoned investors aren’t going to be interested in the properties you find and you will be forced to sell or assign the purchase agreement to other people who don’t know what they should pay. This is because those people don’t really understand how to figure the numbers and once they do figure out they paid too much, it only stands to reason that they won’t want to buy more properties from you. Once word gets out you are asking too much and it will be assumed you don’t know what you are doing and investors will avoid you like the plague. Everyone wants to make an adequate profit from every deal they do or they won’t do the deal. You must realize that there are other ways to profit from real estate other than being a wholesaler. Read More→

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