Archive for Articles
If you haven’t read Who Moved My Cheese? by Spencer Johnson, it’s time to – especially if you’re a real estate investor – because folks, when it comes to buying property at the foreclosure auction, the cheese has definitely M-O-V-E-D!
From December through March, Kim and I took some time down and didn’t work foreclosures. We got back at it last month and went to April’s foreclosure auction loaded for bear. There were six properties on our target list. With this many targets, we were confident of being the high bidder on at least two of them. Imagine our disappointment when we left the auction without buying anything!
At the auction, Kim and I quickly noticed that things had definitely changed – and changed in a BIG way. From 2007 through 2012, buying at the foreclosure auction was like shooting fish in a barrel – it was a target-rich environment. Each month, there were 170 or more properties advertised for foreclosure, but only a couple of able investors on the steps to bid.
This is no longer the case. This month, there were only 80 properties advertised for foreclosure. And on the steps, the number of investors bidding on properties has dramatically increased. In little ol’ Bartow County, we even have hedge-fund buyers and online bidders. Crazy stuff!
So here’s the question: With a lot fewer properties advertised for sale and many more folks bidding, what do you think is happening to the sale prices of foreclosure properties – they’re climbing, right? And what do you think is happening to investors’ profit margins – shrinking, aren’t they? Read More→
Recently, I spoke with a real estate investor who’s having a tough time moving up to the next level of investing. She’s very smart – she has a college degree and is working on her masters. She isn’t the least bit afraid of hard work. She and her husband have already done a couple of deals.
Here’s the thing: She feels she needs to know everything about real estate investing before doing her next deal. I think this has a lot to do with her level of education. For years, she’s been taught that to succeed, you must first go to school and learn lots of stuff before stepping out into the real world.
This just isn’t so. I’m not anti-education – far from it! Each year, Kim and I invest 5% of our net income into our education. At the same time, we’ve never let a lack of education keep us from meeting with sellers. Never forget, meeting face-to-face with sellers and asking Pete Fortunato’s famous question, “Why are you selling such a nice house like this?” is the Alpha and Omega of real estate investing. Never find a reason to NOT meet with sellers – even if you don’t know what you’re doing! Read More→
We’ve all heard that too much of a good thing can be bad. Let’s look at two examples and see if this theory holds water: rental property and chicken poop.
I have a long-time friend who owns more than 100 single-family rental houses. Most people look at this guy with awe. Sadly, I’m forced to look at him with pure pity.
We talked this morning. I invited him to join me, and five of our investor friends, on a 5-day trip to California in April. The purpose of the trip is to get together and discuss creative deal structuring and financing. I’m pretty sure lots of golfing and boating will be thrown in for good measure.
He really wanted to go but was forced to weakly admit, “I can’t be away from my rentals for that long. Something is bound to go wrong, and when it does, I need to be here to fix any problems.”
He and I got into real estate investing around the same time. We had similar goals: to own enough rental properties to produce enough mailbox money so we no longer would have to labor for a living. This would allow us to travel, spend more quality time with family and friends, plus give us the means to help others.
Today, we’ve both reached our goal…sort of. The problem is, my buddy doesn’t know his number. When asked how many rental properties he wants to own, he answers, “More.” More? Why more? When is enough, enough? When does enough become too much? Read More→
Attending Gary Johnston’s Financial Freedom Principals seminar last year (GaryJohnston.com) caused us to make a radical change in what we teach.
Since 1997, Kim and I have taught people how to successfully invest in real estate. Gary’s seminar was the springboard that shifted our teaching from just real estate investing, to how to gain financial freedom. It just so happens that real estate – for reasons like high yields, solid cash flows, huge tax advantages, etc. – is our primary investment vehicle of choice.
What is financial freedom? It’s when the net income from your INVESTMENT assets is greater than your expenses. Think of it this way: On March 1, you have $30,000 in the bank. Because of an illness, you don’t work all month and don’t get a paycheck. You are the sole breadwinner. After paying all of your March bills – expenses never stop – how much money do you have in the bank at the end of March?
If your answer was less than $30,000, then you’re thinking like a wage slave. If your answer is more than $30,000, then congratulations – you understand the concept of financial freedom! Your investment income covered your expenses…and then some!
Here’s the thing: Your goal should be to create a gap between what you earn and what you spend, and then invest this difference in an appreciating capital asset that produces cash flow – you know, mailbox money! Read More→
The May 2013 edition of The Profit Newsletter is now ready for download as a High Quality PDF or Low Res PDF format. The Profit is the official newsletter of Atlanta REIA ( the Atlanta Real Estate Investors Alliance) and is a digitally delivered, interactive newsletter for new and seasoned real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices with a PDF reader. Many of the articles and ads in The Profit contain many hyperlinks you can click or tap to visit websites, watch videos, listen to audios, download content, send emails, comment on articles, share socially and much more! And yes, The Profit is “print ready” for those who still like a paper newsletter. Be sure to Subscribe to The Profit Here so you don’t miss a single monthly issue.
The process is a long one after a home is foreclosed by the bank. These days banks take weeks if not months or a year after foreclosure to get their paperwork together, do evictions, minor clean up and make the assignments to the real estate brokers who they have hired to handle their properties. But the time of clean up and eviction is not a problem for the savvy investor, it is an opportunity to round up buyers so that these properties sell almost immediately as you get them under contract.
I suggest as an investor gets a property under contract to start the process of rounding up buyers. Videos, photos and massive email lists are several ways to attract your potential buyers.
Whenever you advertise your properties use photos or better yet video. I’ll get to more video in a minute. This tends to get the buyer serious before they visit the property. Even for buyers of a 100K home, they like to see pictures and it helps the buyer make an emotional connection. Investors and the individual buyer now search the internet to find homes that they can get serious about buying. It is very important to give them enough information to make a decision. Read More→
Branding is the marketing practice of creating a name, symbol or design that identifies and differentiates your business, product or service from any and all other competitors. Put another way… your brand is your business’s promise to your customer.
Your brand tells your customer what they can expect from your company, products and services. Your brand should uniquely differentiate your business and what you are offering from that of all your competitors. Your brand is derived from who you are, who you want to be and who you’re your prospects and customers perceive you to be.
In the real estate investing industry, Homevestors® is the number one home buying brand in America. They have embraced the “ugly home buyer” concept and made “We Buy Ugly Houses®” their registered trademark, identity and brand. Their mascot is “Ug” the ugly little caveman that helps owners of “ugly houses” out of “ugly situations”. Homevestors® is a great example of the power of branding for any real estate investing company, large or small.
Like Homevestors, I too appreciate the power of branding and have attempted to do some branding of my own at a local level with my real estate investment company, One Hour Homebuyers. We have embraced the “pretty home buyer” concept and have made “We Buy Pretty Houses®”, “Sell Your Houses in One Hour®” and “We Can Buy Your House in One Hour or Less, Guaranteed™” part of our trademarks, identity and brand. Our mascot is the “One Hour Man”, a handsome “super homebuyer” hero who “rescues” home owners from “unwanted houses” and “unwanted situations” fast, one hour fast. Read More→
A civic group asked if I would speak to its members about success. After being in “the game” for nearly 40 years and achieving much success – along with experiencing a ton of failures – I’ve whittled my list of attributes needed for success down to nine.
First, let’s acknowledge that each person’s definition of “success” is different. More importantly, it’s a mistake to make my definition your definition. You must decide what success means to you!
Sadly, lots of folks never take the time or make the effort to write down what success means to them. This is like getting in the car to go on vacation without having a destination in mind. How will you know if you’re on the right road, or whether you ever arrived?
Here are my Nine Pillars of Success: Action, Persistence, Sacrifice, Belief, Integrity, Associations, Life-long Learning, Loving What You Do and Giving Back. Let’s briefly look at each attribute. Read More→
When you sell a property, a wrap will assure you retain control of a loan you have on the property. This may be a loan you got using the property as collateral or a subject-to loan when you purchased the property.
After the sale, the buyer pays you the full payment on the wrap and you pay the underlying mortgage payment. I suggest that you make the payment to the first mortgage holder automatically each month. Don’t wait around until your buyer pays you. Yeah, I know, properly constructed wrap documents do not require you to make the payments if the buyer doesn’t pay you.
But think about it. That underlying loan is in your name and it is your credit is on the line. Or it is in the name of someone who trusted you to make the payments when you took the property subject-to. In that case their credit could be damaged.
In either case, by keeping it current, you keep the lender from scrutinizing the loan and avoid late fees and foreclosure. When your buyer is in default, you want to control the collection process without the underlying mortgage holder interfering. Read More→
“A self-taught man usually has a poor teacher.” ~ Henny Youngman
Did you know that the little iPhone I carry around with me is more powerful than the computer that took Apollo 11 to the moon? It’s true. The Apollo 11 computer was just 64 kilobytes!
It’s amazing, isn’t it? I can balance my checking account on my phone. I get 200 cable stations on my TV, and I bet someday I’ll be able to watch them all at the same time. And I’m pretty sure my kids don’t know how to dial a rotary telephone.
Yes, we’ve come a long, long way from Atari Pong!
(For my younger readers, Pong was a very simple computer game where you made a little ball go back and forth and .…. Well, I guess you kind of had to be there.)
But technology development for its own sake just creates shiny distractions. In the rush for new hardware, new applications, and new and more sophisticated Internet sites, it’s easy to forget about yesterday’s website of the day.
So this month, I’m taking a look at a website that’s well-known and not so shiny anymore, but incredibly useful: Youtube.
Yes, Youtube. I know, it’s old news, but Youtube isn’t just for wardrobe malfunctions anymore. Sure, you can watch the Shamwow guy, or see the zoo lady tickle the baby penguin (I love that one!), or be inspired by that great Chrysler Super Bowl commercial from 2011. Read More→
Commercial Real Estate
Buying Commercial real estate with your self-directed IRA is not much different than buying a residential property, except commercial real estate purchases require a whole lot more due diligence.
Commercial Real Estate – Get the Real Numbers!
The offering says gross potential, (a.k.a. pro forma). This is one of the things you’ll run into all the time. The broker says it’s got a great pro forma. Here’s what it can generate. You want to find out what it did generate, not what it’s going to generate. You want to buy what it’s doing today.
With REOs, foreclosures and distressed sales, you’re going to have to evaluate things on a case-by-case basis and get the real numbers.
Commercial Real Estate – The Truth is in the Documents!
This section outlines the many important documents you need. Having said that, remember you can make the offer in advance of receiving all of the below as long as you make the offer contingent on the receipt of the documents you need. A note about contingencies: make sure you are very specific including amounts you expect to see on the documents, ability to get insurance at the current cost, verification from the county of zoning specific to what you intend to do with the property, etcetera.
A lease is the most important document. Read every lease line by line and make notes, or get somebody that knows how to read leases line by line. Are there any special arrangements? The landlord says they’re paying $1,000 a month, but it turns out that I’m obligated every year to repaint the place, re-carpet the place, and so forth. Read More→
When do you know if you have a great house to purchase, fix and flip? Many investors start out their career looking for fast money. They focus on Wholesaling by looking for deals to get under contract and then wholesale for a $2,000 to $5,000 profit. I’m not saying that you can’t make money in wholesaling; however, you do need to consider all types of real estate transactions such as short sales, lease options, options, and subject to’s in order to find where you can make the most bang for your buck!
My 16 year old son, Taylor, has been involved in my business every since he was able to walk. He is ready to get his first house! We used to put him through windows of vacant houses to unlock doors and get inside so that we could make offers. He has learned so much in my business; many of you heard him speak during my Foreclosures Gone Wild event in Georgia. He is purchasing his 1st house, rehabbing and hiring his friends, then flipping for profit with me, Kimberlee Frank, so he can purchase his first car! Read More→