Archive for Articles

How Do I Fix This Mess?

Posted on May 3, 2011 by

Upside Down HouseSince 2005, we’ve warned investors about the dangers of going to banks to get short-term financing on their real estate investing deals.  (By “short-term financing,” I mean any financing with an adjustable interest rate and/or a term of less than 30 years.)

For the past six years, Kim and I have financed our deals through owner financing or using private money lenders – except for two idiotic, short-term bank loans we foolishly did in 2008.

I’m a real estate professional who is supposed to know what he’s talking about.  So in 2008, when I claimed real estate values had bottomed out and that it was time to buy, I believed me. Read More→

Debt is a Cancer!

Posted on April 29, 2011 by

Debt is CancerOn April 15, 2011, the Feds closed Bartow County Bank.  It’s the third local bank to fail since the real estate bubble popped in 2006.  And this isn’t just a local thing.  The big boys have also been dropping like flies:  LaSalle, Bear Stearns, Merrill Lynch, Wachovia, Washington Mutual, etc.

Here’s the irony: The feds forced these financial institutions to close because they carried too much debt.  So what happened yesterday?  The federal government had its credit rating down-graded because the government is carrying too much debt!  (But who polices the police?)

In addition, Kim and I know plenty of real estate investors who have gone under in the last few years…and it’s not just investors who have tanked.  So have a ton of realtors, mortgage brokers, bankers, contractors and builders! Read More→

Blah Blah BlahA common mistake real estate investors make when meeting with a seller is not listening – really listening – to what the seller says and how he/she says it (e.g. voice inflection and body language).

Frank, an investor in Marietta, Georgia, asked to spend the day with me. He wanted to watch me make offers to folks who had homes for sale. When I asked why, Frank said he was meeting with a lot of sellers but wasn’t getting a lot of deals. He wanted to find out what he was doing wrong.

I explained that to accomplish his goal, I needed to watch him make offers, not vice versa. Frank assured me he was doing everything right, but agreed to my terms. Read More→

There Ain’t No Magic Carpet

Posted on April 13, 2011 by

There Ain’t No Magic CarpetOn a regular basis, we get calls from investors who’ve spent thousands – sometimes tens of thousands – of dollars purchasing some “guru’s” push-button, no-effort-required, real estate investing course, only to discover that successful real estate investing requires persistence, determination and a lot of face-to-face contact with sellers.

When these would-be investors cry about the amount of money they foolishly spent, I’m reminded of something Fred Sanford (of Sanford and Son fame) used to say: “You big dummy!” Read More→

Did You Give Up on Short Sales?

Posted on April 11, 2011 by

Webcast with Kimberlee Frank on changes in the short sale industry“When you are through changing, you are through.” ~Bruce Barton

If you are counting on the past real estate trends and regulations to help you close deals today, that is enough to put you out of business. The short sale industry is changing and if you don’t change, your short sales deals will fall apart. NO CLOSINGS = NO CA$H. For the past couple years, I have watched the short sale industry change on a monthly basis for Investors and Realtors. What worked in the past is not working now; what worked in January 2011 is not working now. Since I am a Real Estate Broker and an Investor, I have had to watch with a keen eye in order to adapt quickly and successfully to the changes.

In order to allow your business to grow and be successful, you must also invest the time to “sharpen the saw” and renew the “mind” of your business………for the sake of your business. The only guarantee we have is that change will always continue. It’s scary and often we want to bury our head in the sand and wait until it passes, but that’s not a choice here. We must arm ourselves with education and turn change from our enemy into our friend. Join us Tuesday evening at 7 PM ET on the Real Estate Junkie Webcast to find out how!

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What to do at the Seller’s Door?

Posted on April 10, 2011 by

What to do at the Seller’s Door?My last two real estate investing columns (“The Key is Finding MOTIVATED Sellers” & “Where to Find Motivated Sellers”) were about why and how to find motivated sellers.  Last week, I said that the most effective thing I do is to simply knock on sellers’ doors.  This week, let’s talk about what to do when you knock on a seller’s door.

When I’m working my area and see a “For Sale” or “For Rent” sign in the yard (NOTE: We’ve bought a lot of properties from don’t-want-to-be landlords), I stop.  It doesn’t matter whether the sign is a FSBO (For Sale by Owner) or a realtor’s sign.

One thing: We don’t cut the legs out from under realtors.  If we find a deal because of the realtor’s sign, the realtor deserves to get paid!

At the door, I ring and/or knock and then back out into the yard about 20 feet.  I back away because I don’t want to crowd the door. Read More→

Where to Find Motivated Sellers

Posted on March 28, 2011 by

Where to Find Motivated SellersLast week’s column, entitled “The Key is Finding MOTIVATED Sellers”, brought in a lot of calls and emails.  The main thing I heard was, “Bill, you ignorant boob, of course the key is to find motivated sellers.  But the hundred-dollar question is: HOW do you find motivated sellers?”

Easy answer: Work your tail off!  But I’m pretty sure this answer will get me labeled as a smart alec, so let’s dig into this question a bit.

Here’s the big picture: You must let everyone know who you are and what you do.  The goal is to have all the folks in your area call you if they are considering selling their property.  Your next task is to separate the folks who WANT to sell from the folks who NEED to sell.  And finally, when you find a motivated seller, you must be able to creatively structure a win-win deal, as well as be willing to pull the trigger quickly – ‘cause great deals don’t hang around long! Read More→

The spices and seasonings of the gourmet real estate investor

Emeril can’t figure out where he made his mistake.  He thought he was getting a great deal when he bought a house and got a 10% discount.  However, he barely turned a profit on his investment.

Julia also is completely stumped.  She bought a house with a 25% discount.  However, after selling the property, Julia lost money.

Any cook can try to cover up a bad chicken with salt, pepper, oregano, lemon, paprika and more, but what do you have?  Still a BAD CHICKEN DINNER.

In the same light, a real estate investor who starts off with too small a discount on their purchase, can try to make up for it after the purchase with hard work, fancy improvements, and eye-catching advertising.  However, what will they still have?  Usually, they will still have a BAD INVESTMENT.

So what are the right spices and seasonings (discounts) every gourmet real estate investor should know about?  How should they be applied like gourmet chefs Emeril Lagasse and Julia Child? Read More→

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→

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