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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.

Have I ever told you how I got started in Real Estate Investing? This is a TRUE Story…

I was nervous. I was confused. I didn’t know if real estate investing was going to work for me, but i really wanted it too! It was my first deal and I was doing it with another investor who wanted to use my money. I thought I had everything set.

If it DID work, I was going to get my money back and make a BIG chunk o’ change. If not, I faced embarrassment and shame in front of my friends and family. I had read a few books. I had studied the concepts. I thought I did everything right.

Wrong! Luck was not on my side. Although I did the deal, I ended up getting cheated by the other investor and I lost all of my money. Everything that could go wrong did go wrong! Ever hear of “Murphy’s Law?” Yeah. It was like that but a lesson well learned.

I could feel the pain, anger and confusion boiling in the pit of my stomach like a bad Mexican meal. I was almost ready to quit – even after just ONE deal! But something inside me made me give it another try. I knew it was my fault that I screwed up and allowed myself to get taken advantage of by another investor who knew a lot more than I did.

Being a professional college student for many years, I figured I just needed a little guidance and training. After all, if it worked for so many other people, why couldn’t real estate work for me? So rather than give up, I decided to DO something about it. I had to make myself smarter. I had to learn some more and get the right training like I did in my college days.

But where could I go? Who could teach me? This was before I even knew real estate investor groups like Atlanta REIA even existed.So I began my search. (Read more to see what I discovered!) Read More→

If You Don’t Play, You Can’t Win

Posted on December 14, 2010 by

If you don't play, you can't winRecently I attended another Real estate Seminar. It was held at an upscale hotel. There  were the usual cast of characters in the room… a cross section of beginners to experienced investors. I saw a number of familiar faces. Folks from the local REIAs were in attendance.  The instructor was upbeat confident and appeared a knowledgeable doer.  He asked the audience 2 telling questions:

  1. How many of you are making 10 offers a week?
  2. How many of you have a buyers list?

Read More→

One of the big pitfalls of starting a small business, such as real estate investing, is how to protect your personal assets from your business investments, and the other way around. If you buy everything in your personal name, you run the risk of a single lawsuit wiping out not only your investment, but also your personal property. As such, I generally recommend that  all small business owners incorporate their business in some way as to provide maximum reasonable protection for your assets.

There is one good reason to buy property in your own name solely, and that is for a refinance.  If you buy real estate and plan to refinance the property to get cash out, or to pay off a hard money loan, almost all conventional banks will require the property be in your own name.  If you know this is your plan going in, then I recommend you buy the property in your personal name and keep it in your personal name until the refinance takes place. This will leave you exposed to the liability of the security deed, and any consequences of foreclosure or defaulting on the loan, but it is the only way to get the refinance done in the first place.  Buying originally in your own name will save you from troubles with possible seasoning issues down the road.  Even in this instance, I still recommend putting the property into a business entity of some sort after the refinance is complete. Read More→

Whether you are an experienced real estate investor or a beginner, there is an available local resource you might want to check out.

Where can you find investor friendly vendors, professionals, funding sources, contractors, other investors, realtors, lenders, as well as affordable education, local information and great networking with people who understand what you are doing and speak a common language?

You can find all of this and more at a well run investor group. They go by various names. They may be called Landlord groups, Investor associations, Investor clubs, etc.

You will find them on the Internet.  Generally the bigger groups will have a Website and may be on Social Networking Sites. You can do a Google search.  Simply put in your city and the name “REIA” (Real Estate Investor Association” or Alliance), you might also look for “Landlord Associations or Groups”.  You may find them by going to other sites, for example National Real Estate Investor Association (National REIA), etc.

Read More→

Do you old time REIA group members remember back when real estate gurus used to attend their local REIA group meetings on a regular basis? Where have all the local real estate gurus gone? Why don’t the real estate gurus attend their local REIA groups anymore as part of the general membership?

Even though Atlanta, Georgia has many local real estate gurus, the only time I ever seem to see them at local REIA group meetings is when they are occasionally invited to come speak and sell a product or service. There are a few notable exceptions, but this seems to be the norm. As far as national real estate gurus go, your average REIA group will parade a new real estate guru before you each and every month at your main REIA group meeting selling a similar, and often more expensive, product or service. As a result, many of these real estate guru’s sales fall far short of their desired sales mark at such REIA groups and they don’t seem to want to attend or speak at REIA groups as much anymore. Read More→

Beware of Contractor ScamsYear after year, home remodeling fraud costs consumers thousands of dollars and considerable stress and aggravation. Another scary thought is that a big part of the people targeted for this type of scam are elderly persons. Contractor fraud is a criminal activity pulled by scam artists on consumers. They tend to prey on senior citizens and singles, taking advantage of their willingness to trust others who sound believable. Sadly, it’s a different world today. It is best to be cautious when seeking workers. Among some fairly obvious tactics, here are some things to watch out for. Read More→

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