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We Buy Ugly TrailersAt our March real estate investors’ meeting, I described a mobile home in a park that we had for sale. Mouths dropped open as I showed nasty pictures of the disgusting property.

How bad was it? The home was full of dog poop. The toilet bowl was so bad that a commercial-grade sandblaster couldn’t clean it. There were gaping holes where the furnace and water heater used to be. The smell made you gag and caused your eyes to water. It was plain awful!

I asked the room full of experienced real estate investors whether anyone wanted to make an offer on this cesspool of an investment property. Heads turned away and eyes were diverted.

In the back of the room, Alex Kramb, a fifteen-year-old student at Blessed Trinity High School, stood up and said, “Mr. Cook, I’ll pay you $100 for that mobile home.” I was dumbfounded. As I pointed to the screen, I asked, “Alex, you’ll pay me $100 for THAT hunk-of-junk?” He quickly answered, “Yes, sir!”

Alex proudly walked up front. We wrote up a bill of sale, I collected $100 cash money and then handed Alex the keys. With that, Alex Kramb, at 15, bought his first investment property. Investors looked on in amazement…then cheers broke out in the room! Read More→

Real Estate AuctionIt never fails.  Several times each year, we shockingly watch inexperienced real estate investors come to the foreclosure auction and bid on a junior mortgage which they mistakenly think is a senior mortgage.

For example: Let’s say a $100,000 house is being sold at this month’s foreclosure auction.  The mortgage being advertised for foreclosure reads $20,000.  An inexperienced investor, who doesn’t know the difference between junior and senior mortgages or how to look them up, shows up ready to bid.  The bidding opens at $18,968.35.  The inexperienced investor confidently bids $19,000.  Slowly, all of the experienced investors back away.  They’re terrified of catching a terminal case of “stupid disease,” which has obviously infected this inexperienced investor. Read More→

Being Rich is About More Than Money

Posted on March 21, 2011 by

Many people think that being rich is about having enough money to do whatever you want.  However, these same people miss an IMPORTANT POINT.  Having millions of dollars may make you “financially rich”.  However you will have lived a “poor life”, if you were a “slave to money” and did not have adequate time for family, friends, and the many other enjoyable things life has to offer.  The following stories illustrate this point.

Jack’s Story

Shortly after Jack turned thirty, he married his college sweetheart.  Jack was a sharp and thoughtful guy, as well as a meticulous planner.  Jack saw all the layoffs happening in the corporate world, and wanted to establish a safety net for his upcoming family beyond the fragile sanctuary of his day job.  He was determined to give his two kids a better quality of life than he had growing up.

Jack invested in rental homes.  He also bought a sandwich shop franchise.

Over the years, Jack did make money on his real estate investments.  However, he also found some very unpleasant surprises.  Tenant turnover was a big problem.  Repairs and re-renting the properties were eating up much of Jack’s time with his family.  Especially upsetting to Jack was the weekend and evening time these properties ate up.  This was time he would rather have spent coaching his son’s sports team and watching his daughter’s theatrical productions.

The sandwich shop also made money.  However, Jack was surprised at how hard it was  to find dependable employees.  Whenever an employee did not show up, Jack or his wife often had to fill in.  Several times Jack had to cancel or postpone the family vacations due to employee issues.

Yes, in the end, Jack’s investments made “good money”.  However, his investments had made a significant negative impact on his family life, as well as his ability to spend time with friends and on other things he loved to do.  There was many a time when he wondered whether all the extra money was worth the sacrifices he made.    Read More→

The Key is Finding MOTIVATED Sellers

Posted on March 21, 2011 by

The Key is Finding MOTIVATED SellersAs folks pass from their thirties into their forties, they suddenly realize that sixty-five and retirement isn’t that far away. They also realize that Social Security is a great retirement plan…if the thought of living under a bridge and eating cold beans out of a can is appealing.

These realizations are why Kim and I are asked to speak to groups around the country about real estate investing. Most folks know that more people achieve financial freedom through real estate than from any other type of investment.

There are lots of reasons why real estate is a great investment/retirement vehicle. Here are just three: 1) Rental income has a very low tax rate. Remember, how much you keep is more important than how much you make. 2) Everybody needs a place to live and about 37% of Americans rent, not own, a home. 3) In the end, the tenant pays off the property for you!

We’re often asked, “To be a successful real estate investor, what is the MOST important thing that I need to do?” Easy answer: Read More→

Are Your Property Taxes Too High?

Posted on March 18, 2011 by

Are Your Property Taxes Too High?Do you think your property taxes are too high?  If you do, how do you get them lowered?  And who’s responsible for determining the amount you pay in property taxes, anyway?

Let’s begin with the last question first.  I greatly respect and much admire the folks who work in the Tax Assessor’s office.  They have a daunting, thankless job!

When Kim and I first began disputing our property taxes in 2006, I viewed the Tax Assessor’s office as my adversary.  Over the years, after spending a lot of time getting to know these folks and learning how the process works, I now realize how WRONG I was. Read More→

Pete Fortunato (PeterFortunato.com) has been one of my main real estate investing teachers for many years.  The guy is phenomenal! (Not to be confused with pneumonia…I’m dyslexic – what happened to “spell it like it sounds?”)  Pete is one of the best and most creative deal structurers on the planet!

Pete has a great saying: “Use what you have, to create what you need, to get what you want.”

Until recently, I’ve never fully understood what he meant.  But finally, the light turned on!

As real estate investors, we’re often asked by prospective tenants or buyers, “Will you work with me on the deposit?”  The usual answer is, “No.  Are you nuts?”  Ok, perhaps we only think the “Are you nuts?” part.

Point is, we’ve always required the cash up front in order to make the deal work.

Similarly, when we’re buying a property, all too often, the homeowner also wants all the cash up front.  Since I’m always light of having the amount of cash the seller needs, the deal is lost.

Now, let’s think like Pete.  It’s not the cash that the seller wants, is it?  Isn’t it what the cash will buy or do that’s the key? Read More→

We see them all over the roads today.  Growing in popularity, Hybrid vehicles are beginning to offer an enticing option to dependence on foreign oil supplies.  Similarly, the Buy Low, Rent Smart, Sell High lease/purchase model offers investors a Hybrid of the “buy and flip” and “buy and hold” investment models.

Most residential investment models resemble and can be grouped into one of two general categories.  Each has a major flaw that concerns many investors who consider or invest in each model.

The “buy and flip” model by definition is for the investor who seeks to purchase property at a discount, oftentimes improve the property, then sell the property quickly for immediate gain.  This model is ideal for investors who have no interest in landlording, as the “buy and flip” investor does not intend to seek a tenant for the property in advance of sale.

The main problem with the “buy and flip” model is that if a buyer does not come by quickly, then the investor is faced with discounting the property and/or involving a real estate agent in the marketing of the property.  Due to this possibility, most “buy and flip” investors need a discount of 25% or more even after adjusting for the necessary repairs and improvement.  With such high investor discounts, the pool of properties available with such significant discounts is often small.  Simply put, the higher the discount the investor needs to make his or her model work, generally the fewer properties available at such a steep discount. Read More→

A few days back, Brad flew in from Virginia to discuss his real estate investing business.  He’s an experienced investor who, for the past three years, has been having a really tough time keeping his head above water.

Brad owns 17 single-family homes, 2 duplexes and a 26-unit apartment building.  He wanted me to look over his portfolio to find out what he’s doing wrong and what he can do to become more profitable.

Over the years, I’ve had the opportunity to meet with a lot of investors, study their portfolios and discuss ways they can do better.  One of the biggest and most common mistakes made – by both new and experienced investors – is doing deals that should never have been done. Read More→

The Three Faces of Foreclosures

Posted on March 8, 2011 by

So you want to invest in residential foreclosures?  Not sure quite where to start?  It is helpful to understand first that there are three faces to “foreclosures”, each with very different characteristics.

The first face of foreclosure investing is the “pre-foreclosure”.  The pre-foreclosure period begins when a homeowner gets behind on his or her loan, and ends with the foreclosure sale.  The pre-foreclosure phase itself is divided into two stages.

The first stage covers the period of time beginning when the homeowner misses their first mortgage payment, and ends in the final month preceding the impending foreclosure sale.  During this time if a homeowner is not already marketing their home, it will be up to the investor to reach out to and find these distressed homeowners through ads (“We buy homes fast” and “We have CASH for homes”) and networking.

The second stage occurs during the final month leading up to foreclosure.  The precise laws differ from state to state, but most states require some form of public notification of a pending foreclosure.  Investors can seek out these notifications, and many have ample contact information for the investors to approach the distressed homeowner. Many larger communities have a number of online and subscription services which compile the pending foreclosures in a specific geographic range.  You can also network within your local real estate investors association and/or do an internet search (e.g. “foreclosure listings in order to find these publications and services). Read More→

How to Buy a Home for $101There Kim and I were, standing in front of the Bartow County Courthouse in Cartersville, Georgia, at the December 2010 foreclosure auction – freezing our tails off.  We’ve been working the monthly foreclosure market since 1995.

Cheryl Bagby, the young lady who cries the foreclosures for McCalla Raymer, the largest foreclosing attorney in the southeast, had just finished reading the legal notice for a home in Acworth, Georgia.

It was a nice 3-bedroom, 2-bath home in a great location on about an acre of land.  The home was rented to a tenant who was paying rent of $795 per month.

When Cheryl finished reading the legal, she said, “The opening bid for this property is $100.  Are there any other bids?  Going once, going twice….” What happened next will blow your mind!  But you’ll have to read along a little further if you want to know how this story ends. Read More→

Should an investor swim or reach for a life preserver?

Just a few years ago, the number of real estate investors was growing by leaps and bounds; however, today many investors that were attracted to real estate in the early part of this decade due to skyrocketing property values have retreated to the sidelines.  The market has been cooling nationwide, and so it seems has the appetite of many investors.  The million dollar question is, are they right?  Should other investors follow their lead?

To help answer this question, let’s look at a similar occurrence that happened in the late 1990s in the stock market.  Stocks began to appreciate rapidly in the mid 1990s. In response, stock investment clubs popped up all over the country. The increased interest in the stock market drew more attention to stocks from previously inactive and novice investors. This brought more money into the stock market, which in turn drove prices even higher. The bubble burst on the stock market in the early 2000s. Stock investment clubs closed and interest in the stock market waned in response to the declining values.

The end of the bull market and start of a bear market in the early 2000s sent many of these new stock investors to the sidelines, just as real estate investors attracted to skyrocketing property values earlier this decade have also just recently retreated to the sidelines. As we asked above, are the retreating investors right? The answer is a resounding NO. Read More→

Mastermind GroupHave you ever sat down with a small group like-minded people with whom you felt like you were mentally connected, that you could think more clearly and that ideas came to you more naturally when you were in their presence. This feeling of mental connectedness is an excellent example of what the late, great Napoleon Hill spoke about in his famous book “Think and Grow Rich”.

Hill said “The mastermind group is a coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony. No two minds ever come together without thereby creating a third, invisible intangible force, which may be likened to a third mind.”

A good mastermind has a synergy of energy, purpose, commitment and excitement that each member brings to the group. Participants constantly raise the bar by challenging each other to brainstorm new ideas, create and implement new goals, stay focused, and provide each other with the ongoing support they need. Working with a group of like-minded, motivated and enthusiastic individuals will definitely help you expand your mind and achieve more than you have ever thought possible.

If you are looking to participate in a mastermind, be sure to check out Atlanta REIA’s new Mastermind Group for Real Estate Investors.

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